Britain warns of incoming budgetary trouble after Truss debacle
The UK government warns of impending tax hikes after Liz Truss.
The UK government warned on Sunday of impending tax increases, particularly for the wealthy, as it attempts to repair the economic damage caused by Liz Truss' brief tenure as Prime Minister.
Rishi Sunak, who succeeded Truss and was en route to an economic summit of the G20 in Indonesia, vowed to bring the spiraling inflation under control, even if it means that already struggling businesses and consumers will suffer further.
When he releases an emergency budget statement on Thursday, his Finance Minister, Jeremy Hunt, told Sky News that the hurt will fall disproportionately on the better off. "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 plan after a tax-cutting budget by Truss caused panic in financial markets.
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Hunt acknowledged that the UK economy was probably already in a recession as a result of the quarter of July through September's contraction, adding, "But we are a resilient country, and frankly, we've faced much bigger challenges in our history."
"We will be asking everyone for sacrifices," the Chancellor of the Exchequer stressed.
"But I think in a fair society, as we are in the UK, we need to recognize 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."
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In order to increase revenue from high earners and impose strict spending restrictions for years to come even as inflation reaches double digits, Hunt is reportedly considering changing the income tax brackets.
According to the Resolution Foundation, a think tank, half of the budget black hole left by Truss was the amount of savings and additional revenue he is requesting, which could total up to £60 billion ($71 billion). "We do have to do some tax rises, do some spending cuts if we're going to show that we're a country that pays our way," Hunt said, insisting that his policies would make any recession "shallower and quicker."
'Badge of shame'
The increase in energy costs brought on by the Western sanctions on Ukraine, cost the economy £140 billion, according to Hunt. "It's like the economy supporting an entire second NHS (National Health Service)," the chancellor said.
Hunt acknowledged that there were "massive pressures" on the system and "unbearable pressure" on the medical staff when asked if the NHS was in danger of failing as a result of the Covid pandemic.
However, he denied a 17% pay demand made by the largest nursing union in Britain, which last week decided to go on strike for the first time in its 106-year history. "We have to recognize a difficult truth that if we gave everyone inflation-proof pay rises, inflation would stay," he said.
Prior to Hunt's budget, the opposition Labour party charged that after 12 years of Conservative rule, the government had left public services like the NHS "on their knees."
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In this week's budget, "austerity 2.0" was not the best course of action, according to Labour's Finance Spokesperson Rachel Reeves, who called it a "badge of shame" that the nurses felt compelled to strike.
Since the summer, tens of thousands of workers across many industries, including the postal service, the legal system, ports, and telecommunications, have gone on strike in Britain in an effort to demand higher pay.
Hunt was also challenged by growing evidence that Britain's exit from the European Union is causing long-term harm, with comparable economies recovering much faster from the pandemic.
He was questioned regarding mounting evidence that Britain's exit from the European Union is having a long-term negative impact, as comparable economies recovered from the pandemic much more quickly. "I don't deny there are costs to a decision like Brexit, but there are also opportunities, and you have to see it in the round," said Hunt, who voted in 2016 to stay in the EU.