The UK is officially in recession.
In a grim financial statement, Chancellor Jeremy Hunt said the Office for Budget Responsibility had seen the UK economy contracting.
Hunt, the country’s finance minister, told the House of Commons that the UK’s gross domestic product is expected to decline by 1.4 per cent next year, before returning to growth in 2024.
He added that inflation is expected to reach 9.1 percent this year and drop to 7.4 percent next year.
Unemplyment is expected to increase from 3.6 percent to 4.9 percent in 2024.
Borrowing will amount to 177 billion pounds (314 billion Australian dollars) – 7.1 percent of GDP.
In Thursday’s autumn statement, he said the UK faced “unprecedented global headwinds”.
He claimed that his plans “will address the cost of living crisis and rebuild our economy.”
His new policies include lowering the top tax, which means people earning more than £125,000 (AU$221,000) will now pay 45% in tax.
Previously, the highest tax rate only affected those earning more than £150,000 (AU$266,000).
“We still have the most generous set of tax breaks of any G7 country,” Hunt insisted.
Energy companies that make profits amid the cost-of-living crisis will also face higher taxes on their profits, at 35 per cent, collecting an estimated £14 billion ($24.8 billion).
Mr Hunt said the government had had to make “difficult decisions” to tackle inflation.
“[Inflation] It erodes savings, causes industrial unrest, and cuts off financing for public services.
“It hurts the poorest and destroys the trust on which a strong society is built.”
He added that the UK was facing “a global energy crisis, a global inflation crisis and a global economic crisis”.
But the British people are tough, creative and resourceful. We have risen to greater challenges than ever before.
“We are not immune to these global headwinds, but with this plan for stability, growth, and public services, we will weather the storm.”
He said that “families make sacrifices every day to live within their means, and so must governments because the UK will always pay for it.”
Mr. Hunt has only been on the job for weeks.
He is hired by former Prime Minister Liz Truss as she struggles to save her job after her financial schemes send the pound sterling lower and mortgage rates soaring.
She resigned and was replaced by Rishi Sunak, who kept Mr Hunt in charge.
Originally published as the UK sinks into recession