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Jeremy Hunt targeted wealthy people and energy companies in a £55 billion ($65 billion) package of tax rises and spending cuts aimed at cleaning up the mess left by unprecedented shocks to the economy.
The measures set out by the Chancellor of the Exchequer will contribute to a 7 percent drop in the disposable incomes of consumers over the next two years, the biggest squeeze on record, and will wipe out eight years of gains.
Prime Minister Rishi Sunak’s government is seeking to combat inflation and rein in the burgeoning budget deficit to restore credibility with financial markets, which dumped UK assets in September after a disastrous experiment with deep tax cuts by his predecessor, Liz Truss.
Reversing those moves, Hunt will raise the tax burden to the highest since World War II and warned that the economy is in a recession that will shrink output by 1,4 percent next year.
“We take difficult decisions to tackle inflation and keep mortgage rates down,” Hunt told the House of Commons on Thursday. “But our plan also leads to a shallower downturn, lower energy bills, higher long-term growth and a stronger NHS and education system.”
Hunt’s program represents the sharpest retrenchment in government spending since the austerity budgets set out a decade ago by Conservative Chancellor George Osborne after the global financial crisis.– Bloomberg
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