UK warns of budget pain to come this week

Published Sun, Nov 13, 2022 · 05:48 PM

Britain’s government on Sunday (Nov 13) warned of impending tax hikes, especially for the wealthy, as it attempt to repair economic havoc wrought by the short-lived tenure of former prime minister Liz Truss.

Truss’ successor Rishi Sunak, who was heading to a G-20 economic summit in Indonesia, has vowed to get soaring inflation under control even if it means more pain for hard-pressed consumers and businesses.

His finance minister, Jeremy Hunt, told Sky News that the pain would fall disproportionately on the better off as he prepares to unveil an emergency budget statement on Thursday.

Hunt conceded that the UK economy was already likely in recession, “but we are a resilient country and we’ve faced much bigger challenges, frankly, in our history”.

“We’re all going to be paying a bit more tax, I’m afraid,” he said, while refusing to be drawn into detail on the figures, after a tax-cutting budget by Truss caused panic on financial markets.

“We will be asking everyone for sacrifices,” the chancellor of the exchequer stressed.

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“But I think in a fair society, as we are in the UK, we need to recognise that there’s only so much you can ask from people on the very lowest incomes, so that will be reflected in the decisions that I take.”

Hunt is reportedly looking at changing income tax brackets, to raise more revenue from high earners, and impose strict curbs on government spending for years to come as inflation hits double digits.

He said the surge in energy prices linked to the war in Ukraine amounted to an economic hit of £140 billion (S$227 billion).

“It’s like the economy supporting an entire second NHS (National Health Service),” the minister said.

“This will be a plan to help bring down inflation, help control high energy prices and also get our way back to growing healthily, which is what we need so much.”

Hunt also said that Britain’s labour force shortages are more of an issue for the economy than Brexit, adding that he would seek to address constraints that businesses are facing on hiring in his upcoming budget plan.

Asked whether Brexit was the reason Britain’s economy was lagging other countries, Hunt told the BBC: “I don’t think that’s the biggest issue ... I think it’s much more to do with other factors in the labour market that I want to think about.”

“That’s creating constraints for businesses that are finding they can’t employ the people they need to. That’s absolutely something I’ll be talking about on Thursday.” AFP, REUTERS

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