The United Kingdom announces tax increases and spending cuts by billions

Many of Hunt’s actions were forwarded by the government, and markets largely ignored his address. The British pound, which had appreciated before the speech, fell slightly to 1.17 pounds to the dollar.

Labour’s shadow chancellor, Rachel Reeves, said in response to Mr Hunt: “The chancellor should have come here today to ask for forgiveness.” She said the Conservative government had left Britain with “rising inflation, declining growth and falling living standards”.

The budget is a pivotal test for Mr Sunak, the ex-adviser who once worked at Goldman Sachs who brought a more technocratic approach and a financial mindset after experimenting with the supply side for Ms Truss. He won a contest to replace Ms Truss last month after failing to beat her in a summer leadership campaign in which he warned tax cuts would cause chaos.

Mr Sunak is betting the measures will put public finances back on sound footing, restore Britain’s reputation in global markets and put the economy in a position to rebound before the election. But in the short term, Mr Hunt acknowledged the measures were likely to deepen misery for Britain, which is still reeling from the economic fallout of Brexit and the coronavirus pandemic.

Some have likened the budget to the austerity measures imposed by Prime Minister David Cameron and his adviser, George Osborne, after the 2009 financial crisis. This emptied many public services in Britain, including the NHS, which suffered from the additional burdens imposed by the government. British. pandemic.

Mr Sunak was said to have been deeply involved in analyzing numbers with Mr Hunt, whom Mrs Truss appointed as a consultant after she ousted his predecessor Kwasi Quarting. Mr Sunak and Mr Hunt reportedly wrestled over how to balance tax increases with spending cuts, initially pushing for a roughly 50/50 split, before shifting the focus slightly in favor of spending cuts, many of which would take effect later.

Economists generally agree that putting spending lower before tax increases can have a more beneficial effect on rebalancing the books. A study of 17 such programs dating back to 2006 by Oxford Economics, a forecasting and analysis firm, found that the ideal mix was about 60 percent spending cuts and 40 percent revenue-raising measures — roughly the split announced by Mr. Hunt.

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *