In light of the nation’s economic challenges, the UK government unveiled its £55 billion ($66 billion) spending plan.
The idea, according to recently appointed Finance Minister Jeremy Hunt, would try to enhance the nation’s economic activities. According to Hunt, the program will implement tax increases to raise about £25 billion in revenue while cutting spending by a total of £30 billion. Additionally, the proposal will reduce the maximum income tax rate to £125,140 and freeze income tax for two years. The expenditure plan put forth by the previous administration contradicts the features of the current one.
“Unfunded tax cuts are as risky as unfunded spending. So we need a fiscal and monetary policy to work together. That means the government and the Banks working in lockstep. It means, in particular, giving the world confidence in our ability to pay our debts,” Hunt said.
Fortunately, Hunt’s spending habits differed from those of Truss and Kwarteng. The previous prime minister and finance minister left their positions mostly due to public backlash against the spending plan they proposed in September. Hunt affirms that the UK’s businesses and households will come under pressure under the existing approach. But he insisted that they were needed to halt the 41-year high inflation.
″We must continue a relentless fight to bring (inflation) down, including a rock-solid commitment to rebuild our public finances,” Hunt added.
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UK will see more changes
More modifications will come from to the administration while Hunt and the most recent prime minister Rishi Sunak attempt to fight the nation’s rising inflation. An extra 10% of benefits, including tax breaks and state pensions, are part of the expenditure plan.
The National Living Wage was also raised by the UK government for workers age 23 and over, to £10.42. Hunt added that the windfall tax rate for the energy sector would jump from 25% to 35%. A household would now pay £3,000 instead of £2,500 because of reductions to the household bill subsidy.
Previously, when Truss discussed the UK’s deteriorating economic situation, she also hinted at the likelihood of the nation having to make painful decisions. Truss, in contrast to Sunak and Hunt, made administrative choices that injured her political career. As a result, many asked her to leave her post and served as Prime Minister for a very short moment.
“We had to take urgent action to get our economy growing, get Britain moving, and also deal with inflation, and of course, that means taking controversial and difficult decisions. But I’m prepared to do that as prime minister because what’s important to me is that we get our economy moving,” she said.
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A hard fight for the country
PM Sunak received a significant burden from Truss. As soon as Sunak assumed leadership, he had to make a statement to pacify the populace and business community. But given his extensive political background, many people anticipated Sunak would alleviate the country’s financial troubles.
“Right now, our country is facing a profound economic crisis. The aftermath of COVID still lingers. Putin’s war in Ukraine has destabilized energy markets and supply chains the world over. I will place economic stability and confidence at the heart of this government’s agenda. This will mean difficult decisions to come,” Sunak said after his appointment.
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