Rishi Sunak managed to placate the hard wing of the Conservative Party, always prone to internal revolts, with a mix of good words and a certain populist rhetoric; with a detail-obsessed administration and a dose of boredom that has left an adrenaline-fueled bench in Parliament lethargic in recent years. His first budget, presented to the House of Commons by business secretary Jeremy Hunt on Wednesday, avoided falling under the tax cuts demanded by more neoliberal conservatives and maintained the fiscal prudence with which Sunak took office. But at the same time he promises surgical measures of tax cuts and government spending aimed at solving the UK’s two main economic problems: the lack of investment by companies and the loss of millions of British jobs.
“Those who foresee the fall [del Reino Unido] You are wrong. Optimists, we did well,” Hunt proclaimed in the only display of triumphalism permitted in an hour-long speech. The moderate tone did not hide a certain relief with the improvement in the country’s prospects announced by specialists and international organizations.
At the same time as the minister performed the classic ritual of being photographed outside 11 Downing Street with his red leather briefcase before entering Parliament and announcing the details of the new budget, the Office for Budget Responsibility (OBR, for its acronym in English ) its views on the new bills and the projections it could make on the basis of them for the progress of the UK economy. “The economic and fiscal outlook has improved slightly since then. [las últimas proyecciones de] November. The short-term lack of growth is now becoming more superficial, while medium-term GDP will be higher and the budget deficit smaller,” the OBR said. According to this body, the British economy will no longer experience negative growth of 1.4%, but the contraction will amount to 0.2%. And inflation, currently at 8.8%, will fall to 2.9% by the end of the year.
Sunak and Hunt came to power together last October to save Britain’s international credibility and restore the country’s economic stability following the disaster caused by the historic tax cut of ill-fated former Prime Minister Liz Truss. So they kept up fiscal pressure and announced spending cuts to restore fiscal accountability and calm markets.
The new Prime Minister, whose arrival to Downing Street was not expected, has bought time to clean up the mess he inherited from his predecessors Truss and Boris Johnson. He succeeded in striking a new deal with the EU, known as the Windsor Framework Agreement, to end Northern Ireland’s toxic litigation and tangle in the post-Brexit era. And during his bilateral meeting with President Emmanuel Macron last week in Paris, he conveyed the feeling that it is possible to reopen a chapter of cooperation and good relations with the European continent. At the same time, to the applause of the most recalcitrant conservatives, he gave a hard message to illegal immigration, which served to align them with the government.
Pensions, childcare and tax deductions
The hardest thing for many Conservatives to swallow was the Sunak government’s decision to go ahead with its idea to raise corporate tax from the current 19% to 25% from April, bringing the UK closer to the average for the rest of Europe is coming. Hunt also decided to end the so-called corporate superdeductions, which Sunak had paradoxically introduced during his time as Treasury Secretary in the Johnson administration. Previously, the measure allowed companies investing in capital goods to deduct up to 130% of their pre-tax income. The new budget continues to show generosity towards companies investing as it is a fundamental part of an economy whose uncertainty has been exacerbated by Brexit. Hunt promised a 100% reduction in new investment in technology, energy security or environmental sustainability worth more than €10 billion over three years.
The UK has emerged from the pandemic with significant labor market stress. In addition to the hundreds of thousands of EU workers who have left the country and never returned, those on long-term sick leave – experts estimate nearly two million people – and a tax policy for private pension schemes – the majority in the UK – have stayed at home – this work has been discouraged from the age fifty. It’s probably the Sunak government’s most discriminatory measure, as it targets the country’s wealthiest minority, but that’s exactly why it received the highest praise from the conservative bank: Hunt announced that the annual tax-free pension threshold would rise from 45,000 to almost 70,000 euros.
But more importantly, this cap on the amount collected over your working life will be removed. So far, many 1.2 million Euro workers have decided to retire and live in Spain, Portugal or Greece. Anything saved of that amount was taxed at 55%. From the new budget, all accrued income is tax-free. “My team calls them older workers. Since I am 56 years old, I prefer to talk about employees with experience,” says Hunt wryly. “There are about three and a half million people who are no longer part of the labor market,” he stressed.
More measures were announced to revive this labor market. The government increases subsidies for kindergartens by 5,700 million euros; He promised a review of the aid that the disabled or disadvantaged receive to prevent them from losing it if they decide to work; and construction added to the list of sectors where it is easier to attract foreign workers.
Lack of long-term vision
Labor opposition leader Keir Starmer took advantage of the weakness of the proposed measures to attack the Sunak government and the UK economy: “A country on the verge of losing control, far behind our competitors, Europe is sick again Starmer said. who accused Downing Street of “disguising as stability what is nothing more than a freeze”. Elected to a clear victory in the next general election, the Labor Party has promised a major transfer of political and economic power to the country’s regions and local governments, calling the last decade of Conservative rule a wasted decade.
In his speech, Starmer reminded the Minister of Economic Affairs of the great absence: the tens of thousands of civil servants who are now striking en masse and demanding fair wages. Sunak has so far refused to deal with them for fear of fueling inflation, whose predictable fall Secretary Hunt paradoxically applauded.
Source: La Neta Neta
Karen Clayton is a seasoned journalist and author at The Nation Update, with a focus on world news and current events. She has a background in international relations, which gives her a deep understanding of the political, economic and social factors that shape the global landscape. She writes about a wide range of topics, including conflicts, political upheavals, and economic trends, as well as humanitarian crisis and human rights issues.
