Chancellor of the Exchequer Jeremy Hunt will present the measures to British MPs this morning, after weeks of speculation about the substance of the so-called “autumn declaration”.
So far, Hunt has only said “tough decisions” will be made in terms of spending, and on Sunday he admitted to Sky News that taxpayers will have to “pay more in taxes” to respond to the current economic crisis facing the UK.
However, the opposition fears that the budget cuts represent a new wave of austerity similar to that of 2010 that punishes the most vulnerable and low-income people who are hardest hit by the rising cost of living.
The BBC said the government had prepared budget cuts of around £35,000m (€40,000m at current exchange rates) and planned to collect £20,000m (€23,000m) in taxes.
The UK’s main state budget, also known as the ‘Spring Statement’, is usually presented in March, while the ‘Autumn Statement’ usually boils down to an assessment of implementation, and may sometimes include some amendments.
Initially dubbed the Medium Term Financial Plan, today’s intervention has practically been transformed into an extraordinary budget due to its importance in terms of policies on social support, pensions, public services and infrastructure investment.
With today’s actions, the British executive is hoping to restore the country’s economic credibility after the turmoil caused by former Prime Minister Liz Truss’ “mini budget”, which advanced several tax cuts without justifying how it would be paid or affecting debt.
Liz Truss has tendered her resignation after just over 40 days in the position.
Enlisted by Truss to “stabilize” the economy, Jeremy Hunt ended up reversing nearly all of the measures taken by his predecessor Kwasi Quarting and stemming volatility in the financial markets, contributing to his survival in office after the nomination of the current British Prime Minister. Minister Rishi Sunak end of October.
According to the Research Center for Resolution, the mini-budget lost about 20,000 million pounds (23,000 million euros) in tax revenues and 10,000 million pounds (11,400 million euros) in additional costs due to higher interest rates on sovereign debt.
Jeremy Hunt’s statement will be accompanied by new independent projections from the Office for Budget Responsibility on economic growth and the state of public debt, which currently stands at 98% of GDP.
The British economy, like many other countries, is suffering from the impact of the Russian invasion of Ukraine, which has pushed up food and energy prices, sending inflation soaring to 11.1% in October, the highest rate since 1981.
British official statistics revealed last week that the British economy contracted by 0.2% in the third quarter of 2022, confirming estimates of the recession that the Bank of England believes will be long.
Earlier this month, the central bank announced the largest increase in interest rates in three decades, by 0.75 percentage point to 3%, citing the need to combat inflation.
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