UK: Chancellor Plans Billions in Tax Increases and Spending Cuts

UK Chancellor of the Exchequer Jeremy Hunt released his Autumn Statement to the House of Commons and the British public on Thursday, which contained tax increases and spending cuts.

UK: Chancellor Plans Billions in Tax Increases and Spending Cuts
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Facts

  • UK Chancellor of the Exchequer Jeremy Hunt released his Autumn Statement to the House of Commons and the British public on Thursday, which contained tax increases and spending cuts.
  • As expected, Hunt left the three main tax rates unchanged, although the £150K threshold to begin paying the 45% rate was slashed to £125,140 — a change that will affect approximately 250K people in the UK.
  • The total savings from the Autumn Statement is approximately £55B through tax increases and spending cuts. The Chancellor also announced that the windfall tax on oil and gas companies would be extended until March 2028 and increased from 25% to 35%.
  • The National Health Service budget will be increased by £3.3B in each of the next two years as part of a "record" £8B package for the health and social care system, alongside an extra £2.3B per year being invested into British schools for the next two years.
  • While forecasts from the Office for Budget Responsibility project that the economy will grow by 4.2% this year, Hunt admitted that the economy was already in recession — predicted to shrink by 1.4% next year before rising by 1.3% in 2024. Hunt stated that he was providing "fair solutions" despite taking "difficult decisions."
  • The announcement comes a day after inflation reached a 41-year high of 11.1% in October, with the Office for Budget Responsibility predicting the year's average rate to end at 9.1% for 2022 and hit 7.4% in 2023.

Sources: BBC News, Guardian, Sky News, Itv, and Newsletter.

Narratives

  • Right narrative, as provided by Telegraph. In what has been a shocking year for the Conservatives, the Autumn Statement must be the beginning of a party fightback. Hoping to calm the markets and ease pressure on government borrowing, there is still time for the Conservatives to relaunch and win over a skeptical British public in the next 18 months. With hope, through Hunt and Sunak's short-term policies, in 2023, the party can return to its tax-cutting normality.
  • Left narrative, as provided by Guardian. The Tories have no remorse, employing the austerity strategy used by George Osborne twelve years ago. Siding with oil and gas companies rather than helping the average person, we will all continue to pay the economic price for the Conservative party's continued failings within government.

Predictions