With vote after vote with the Conservatives losing heavily to the main opposition Labour Party in the general election, the government hopes that putting more cash in people’s wallets during a cost-of-living crisis will improve the Conservative Party’s poor rating.
THE BRITISH TREASURY CHIEF IS PREPARED FOR THE UK ECONOMY TO FALL INTO RECESSION IF IT MEANS REDUCING INFLATION
Elections will be held until January 2025, but may be held as early as May. Hunt’s boss, Prime Minister Rishi Sunak, will set the election date as his party tries to retain control of the government, which he has held since 2010. .
British Treasury leader Jeremy Hunt is seen on Oct. 15, 2022, in London, England. Hunt went to Parliament on Wednesday to announce tax cuts for millions of candidates, a move his Conservative Party hopes could replace the political game ahead of next year’s election. (Chris J. Ratcliffe/Getty Images)
Hunt is expected to tell Parliament that the U. K. economy has withstood the coronavirus pandemic and a sharp rise in energy costs following Russia’s invasion of Ukraine, which has sent inflation soaring and prompted the Bank of England to aggressively raise interest rates.
“Of course, interest rates will remain at peak levels as long as we bring inflation down,” he plans to say. “But because of the progress we’ve made, because we’re delivering on the Prime Minister’s economic priorities, we’re now able to offer families permanent tax cuts. “
Hunt, who had a previous meeting with King Charles III at Buckingham Palace on Tuesday, is expected to announce a cut in National Insurance (a tax paid by 27 million workers) of 2 percentage points to 8%. If that comes to fruition, it will maintain its resolve to cut the interest rate by the same amount in November.
There is also the hypothesis that Hunt could simply take steps to reduce the fundamental rate of the tax on the source of income by one percentage point. This would also gain advantages for retirees and savers, but it would be incredibly expensive.
Whatever the outcome of the cuts, it will be paid for by restricting spending on already cash-strapped utilities, as well as raising taxes, potentially on business-class airfare, vapes, and raising taxes on oil and fuel producers. There have also been hypotheses that it could simply abolish the “non-domiciled” tax status, which allows certain high-net-worth Americans to pay taxes in the UK.
Sunak has indicated in the past that the election will likely be held in the second half of this year. However, Sunak did not rule out the option this spring, and Wednesday’s tax budget cut may serve as a launching pad for that.
The UK and the US will give concessions to the industry to stimulate the economy through the Inflation Reduction Act
Both Sunak and Hunt restored some economic stability after Liz Truss’s short-term tenure, which sank after a series of unfunded tax cuts that rattled money markets and raised borrowing costs.
But British families are grappling with the worst cost-of-living crisis in decades. And economists warn that the tax burden will remain near record levels, regardless of the final budget outcomes, as the government recovers billions of pounds. The pandemic passed, and the power paid off.
Adam Corlett, chief economist at the Resolution Foundation think tank, said there were “big questions” about the need for tax cuts this year, given the outlook for government spending and the need for our national debt.
“But while this year will be an election year of tax cuts, it sits between gigantic tax increases and long-term tax increases, and the budget will most likely only add to the number of tax increases that will come after the election,” he said. saying.