The Government presents minimalist measures to mitigate price increases and reserve capital for the electoral campaign
British citizens face the largest annual reduction in their disposable income since the Office for National Statistics began its calculation, in 1956. With year-on-year inflation in February at 6.2% and this year’s average forecast to be 7.2 %, the Office of Budget Responsibility estimates a 2.2% drop in purchasing power.
The data of the entity that independently analyzes the situation of the British State accounts offered the Minister of Finance a positive fiscal picture, with a collection higher than expected by 60,000 million euros, and the consequences of the drastic increase in the cost of lifetime. To these two bases he added a great uncertainty about the effect on the accounts of the war in Ukraine.
Rishi Sunak has announced in his spring budget – there is another autumn – modest measures. Reduces the tax on gasoline and diesel by five cents per liter (with an effect of just under 4 euros to fill a 55-litre tank). With increases of 50% in the price of energy until October, eliminates VAT on materials for the installation of alternative domestic generators.
Optimism
“Is that all?” he was asked from the Labor benches. Conservative MPs had also publicly called for more radical action. But Shunak wants to keep the unexpected income in the state coffers, warning that next year the interest on the debt will add up to 100,000 million. His goal is for debt to be 78.9% of GDP in the 2026-27 financial year.
At the moment, the increase in spending announced in the fall for the Ministry of Health and Social Assistance or Education is cut by inflation. Also pensions, or unemployment or income subsidies. To compensate, it increases the threshold for the payment of National Insurance (a tax deducted from the payroll that is not contributory), subtracting some 7,000 million from the 12,000 that it wanted to collect with the increase in the tax announced six months ago.
Sunak, often portrayed as the alternative to Boris Johnson’s leadership, has been damaged by rising taxes across the board, massive fraud uncovered in corporate loans during the pandemic and his opportunism to get away from Johnson when he’s in trouble. He now strengthens his figure before his party by promising a reduction in income tax and a spending plan to promote productive investment, which he will deploy just before the 2024 elections.
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