The British Government has cut 23 billion euros in taxes in the annual Autumn Budget, in a change of direction that is justified by the unexpected increase in revenue. “The budget for growth” projected by Minister Jeremy Hunt distributes these discounts between large and small companies, salaried employees and the self-employed.
British politics is focused on general elections expected in the autumn of 2024 and the current Conservative Executive has to overcome an advantage over the Labor opposition of more than twenty points in the polls. Hunt boasted this Wednesday about the prompt fulfillment of the leader’s promises, Rishi Sunak, made a year ago, which would have allowed for the greatest relaxation in spending.
The two-point reduction in an income tax called National Insurance affects all taxpayers. The Government has decided that the reduction will come into force in January, instead of the first week of April, as usual, as this is the opening and closing date of the fiscal year. The goal is to make voters happy early in the election year, just when they are filling out their returns.
In fast-paced British politics, a year seems like a century. The latest Autumn Budget was presented by Kwasi Kwarteng. It caused the bond market to collapse and the Bank of England to intervene. The minister and the head of government, Liz Truss, wanted to change the direction of the economy by prioritizing growth and to do so they reduced taxes by more than 50 billion.
After Truss’s brief time in Downing Street, Sunak inherited a deranged parliamentary group. With Minister Hunt, who did not have substantial support from his colleagues to be the leader of the party in the whirlwind of 2022, he has established a once again predictable government. The prime minister had promised three economic points (inflation, growth and debt) and he has more or less fulfilled them.
Labor plans
Hunt fulfilled this Wednesday his promise to halve inflation, from 11.1% to 4.6%. Consumers’ experience is of food prices that had increased annually by 19.1% in March, and 10.1% in October compared to the previous year. The Bank of England predicts slower than expected in reaching the 2% target, which it now expects to be reached in 2025.
The minister endorsed the ‘Tory’ government by stating that the British economy has grown more, since 2010, than “our competitors, such as Spain, Italy, France, Germany and Japan.” The Office for Budget Responsibility (OBR) had forecast a 1.4% decline in GDP, but it has increased by 0.6%. The deficit of 4.5% of GDP this year will be less than 3% in successive years.
The Labor Party has Rachel Reeves, a former economist at the Bank of England, as its front-row portfolio manager for the opposition. Electoral forecasts say that she will sit in the Treasury chair in 2024 and that she will have very little room for maneuver to push for a substantially different policy.
Faithful to the legacy of Tony Blair and Gordon Brown (last Labor prime ministers), he has had to withdraw public spending plans. The most notable promised 32 billion euros annually in the production of renewable energy. Like his leader, Keir Starmer, he quickly polishes the edges of controversial or risky ideas. To give credibility to a future government of the British left party
A leading country in Europe in information technology and life sciences, eighth in the world for its industry, according to data from Minister Hunt, the United Kingdom is governed with more rest and order than at any other time since Brexit. The question is whether the damage to the Conservative Party’s reputation can be healed in the coming months.
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