UK Jeremy Hunt Hikes Taxes, Squeezes Public Spending

British finance minister, Jeremy Hunt announced a string of tax increases and tighter public spending in a budget plan on Thursday that he said was needed after the blow dealt to the country’s fiscal reputation by former prime minister Liz Truss.

Outlining a 55 billion-pound plan – almost half from tax rises – to fix the public finances, Hunt said “the economy was already in recession and set to shrink next year” as it struggles with inflation forecast to average 9.1% this year and 7.4% in 2023.

Britain’s budget watchdog said “rising prices would further erode people’s wages and reduce living standards” by 7% by April 2024 – the year a national election is expected – wiping out growth over the eight years to 2022. Millions of Britons are already struggling with a cost of living crisis.

The tax burden would hit 37.1% of GDP, its highest sustained level since World War Two, at the end of its five-year forecast period, the OBR said, up from 33.1% in the 2019-20 tax year.

But Hunt said he could not avoid painful fiscal medicine – although much of it will not kick in immediately – if Britain is to build on the recent restoration of calm in financial markets.

“Credibility cannot be taken for granted and yesterday’s inflation figures show we must continue a relentless fight to bring it down, including an important commitment to rebuild the public finances,” he told parliament.

Reuters/Shakirat Sadiq