With tax cuts for businesses and workers, British Chancellor of the Exchequer Jeremy Hunt wants to boost economic growth and attract voters back to the Conservative Party before the 2024 elections. He describes this as “the biggest tax cut in modern British history.” Three questions for UK economist and expert Willem Sass (University of Stirling, KU Leuven).
Budget presentation on Wednesday – the so-called ““autumn statement” – From British Prime Minister Jeremy Hunt, this is the third since he took office, succeeding his predecessor Kwasi Kwarteng last year. The latter was sacked just over a year ago after just 38 days by Prime Minister Liz Truss, who resigned shortly after, after his economic policy plans caused financial markets to soar. Hunt’s first order of business was to calm markets and tame inflation. The promise was to halve inflation in one year.
What is the balance sheet after one year?
Willem Sass: “There are two sides to the story. Indeed, inflation fell from 11.1% in October 2022 to 4.6% last month. And now the government is putting this on its good news programme, although this is not their merit as much as the Bank of England and cooling global inflation deserve it in the first place. On the other hand, economic growth numbers appear less rosy than they were six months ago. The Independent The Office for Budget Responsibility (OBR) made the announcement today It now assumes growth of 0.6% this year, while earlier this year it was assumed a contraction of 0.2%. However, forecasts for 2024 and 2025 have been significantly revised downwards.
According to Minister Hunt, to achieve higher growth, productivity must increase. How does he want to achieve this?
Sass: “The logic is: cut taxes and invest in business to boost growth. This is also in the Tory DNA. Hunt will increase the minimum wage by 10%, to £11.44 an hour, and cut the social security contribution from 12 to 10% from 10%.” From January. This means saving between £350 and £400 a year for most families. Government benefits and pensions will also increase, and breaches will be dealt with more strictly. There will be a tax break for direct corporate investment worth around £9 billion a year. Hunt believes that the decline Greater than expected inflation creates the necessary space in the budget for this.
The main question, of course, is whether he will succeed in achieving his goal and convincing voters. In the poll, the Conservative Party is expected to lose 20 percentage points to the Labor Party.
Sass: “Productivity growth has been fairly stagnant since the 2008 crisis. This may be too slow to gain real momentum. Growth is expected to range between 0.3 and 0.4 percent. This is modest, especially compared to the lavish political circus. Hunt himself talks about “saving the economy.”
“The promised tax cut – the biggest in modern British history, as he calls it – also stands in stark contrast to the decision not to index income tax tables. These do not evolve with inflation, which implies that everyone will pay more tax. Britons will bear the burden Tax rate of 38%, which is higher than ever before.So what is proposed as a tax cut is a net increase in taxes because increased wages end up at higher levels.
“Conservatives are clearly moving toward the center. The last tough thing went away last week with Suella Braverman com. brexiteer From the government. Hunt’s plans include measures that could be described as reasonably social, which moderates will be happy with. Tough but fair, that’s the motto. But I highly doubt whether that will be enough to win back enough souls.
“Travel enthusiast. Alcohol lover. Friendly entrepreneur. Coffeeaholic. Award-winning writer.”