Jeremy Hunt announced several tax hikes and tighter government spending in a plan in his speech on Thursday that he believes is necessary to repair the country’s fiscal standing.
After outlining a 55-billion-pound plan – about half coming from tax increases- Hunt noted that The economy is already in recession and is set to shrink next year as it struggles with inflation forecast to average 9% this year and 4% in 2024.
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Prices have gone up significantly, meaning many people in Britain have trouble paying their bills and have very little in savings. Millions are struggling because of the cost-of-living crisis, and it’s expected to get worse by 7% in the next five years. This is the expected growth rate until April 2024 when the next national election is held.
According to the OBR, the tax burden will rise from 33.1% of GDP in 2019-20 to 37.1% at the end of its five-year forecast period.
Still, Hunt stated that he couldn’t get around painful fiscal medicine if Britain is to strengthen the recent financial market peace.
“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.
British inflation was 11.1% in October, a 41-year high. Sterling plunged about 1% against the dollar and about 0.2% against the euro after Hunt spoke.
Following Hunt’s announcement, more people will be taxed at the basic and higher rates, while the amount you earn before paying the top 45% tax bracket has also been lowered.