The United Kingdom raises taxes and poses the highest public spending cuts in the decade

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UK raises taxes and proposes biggest public spending cuts in a decade

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The British government of Conservative Prime Minister Rishi Sunak announced a new decision. This Thursday the biggest plan to increase taxes and reduce public spending in a decade, with the aim of raising 62,000 million euros. The new strategy of return to austerity and fiscal orthodoxy comes as the UK has entered recession strong>and it won't come back. to growth until 2024, at the earliest. Barely two months after the disaster caused by the short-lived Liz Truss mini-budget, with tax cuts and increased public spending, her successor corrects those errors and takes the opposite path, to restore credibility of the British economy in international markets, control inflation and begin to reduce the amount of public debt. The increase this year in the interest on that debt, which skyrocketed over the past year. with Truss, it is the main reason for the painful cutback policy.

The long-awaited “autumn budget”, presented by the Finance Minister, Jeremy Hunt, in the House of Commons, proposes spending 34.5 billion euros less and raising 27.5 billion More euros will be added in the next five years, in what is considered a new period of political austerity that the conservatives already implemented in 2010.

The tax increase will affect the You will learn multiple aspects of taxation, including income tax, Social Security contribution, pension funds, inheritance tax and VAT. This time, unlike what Truss proposed, the richest are not excluded. The highest contribution level (45%) affected those with an income of more than 150,000 pounds a year (170,000 euros). Now that bar drops to 125,000 pounds (143,000 euros), which means the entry of 250,000 people into the highest category.

Extra energy profits

Increases the excise tax on extraordinary profits of energy companies , the so-called 'windfall tax'. “From next January 1 to March 28 we will increase that tax from 25% to 35%. Similarly, we will also tax the windfall profits of low-carbon power generating companies an additional 45%,” Hunt said. The collection will serve to extend for one more year from next April the aid for the energy bill of families and companies, although they will be more selective in order to help to the most vulnerable and precarious.” Our priority is stability, growth and public services. It also protects the most vulnerable“, declared the minister. In this sense, he confirmed that the minimum wage will increase by 10%, as well as social benefits and pensions The budget cuts will affect most departments, with only NHS and education in England seeing increased allocations, according to Hunt.

Sunak's new strategy responds to a The economic situation is extremely serious , as can be seen from the analysis of the Office of Budgetary Responsibility (OBR) , the independent body for fiscal responsibility. According to the OBR, the UK is in recession and gross domestic product (GDP) will decline as soon as possible. 1.4% next year, before returning to growth in 2024, until then the economy remained below pre-pandemic, unlike other G-7 countries. The standard of living for the British will decline as soon as possible. It will grow by 7% in the next two years, wiping out the last eight years of growth in one fell swoop. The OBR also predicts a 9% drop in home prices.The reduction of expenses during the next few years will make it easier for us. Recession and recovery will be even harder for citizens exposed to interest rates of 3% and rising, and rising inflation of 11.1%, the latter factor that Hunt pointed out in recent years. as public enemy number one. “High inflation is the enemy of stability, it means higher mortgages, more expensive food and fuel, businesses that should shut down and growth in unemployment”.

 

British circumstances

Hunt blamed the economic recession for the US economy. There are, however, reasons specific to British circumstances, from political instability (three prime ministers and four finance ministers in one year), to the increasingly evident barriers and negative burdens of Brexit, which the parties do not want to admit.

The Labor head of Finance , Rachel Reeves, stressed that the problems for the country's economy began before the pandemic and the invasion of Ukraine and are the result of “12 years of unrest.” failure” from the Conservatives. “The problem for the British is that this is not a dream, it is a nightmare.