The worst collapse of the quality of life in Britain.. Sunak government approves an austerity plan that burdens citizens with taxes
Difficult days or perhaps years await the British economy. This is what can be understood from the details of the new budget that Treasury Secretary Jeremy Hunt presented to the House of Commons. A budget that presents a bleak picture of the country's situation amid pessimistic expectations of being able to get out of this tunnel in the near future.
It has become almost certain and officially that what the British citizen is experiencing is the worst collapse of the quality of life in Britain since World War II, due to the high inflation rate above 11%, and the inability of the British economy to take off after the Corona pandemic.
The British economy is the worst economy in terms of growth rate compared to the G7 countries, which all achieved good growth rates, with the exception of the United Kingdom, whose economy shrank by 1.4% after the Corona pandemic period.
Despite Jeremy Hunt's attempts to reassure the British with a package of aid to cover the costs of the energy bill, it will not hide the difficult economic reality, for which the Conservatives bear part of the responsibility, especially after the losses incurred by the British economy following the "mini budget", which was proposed by former British Prime Minister Liz Terrace and commissioned The economy lost 33 billion pounds in just two weeks, according to observers.
More taxes
Most of the economic analyzes of the budget of Rishi Sunak's government agreed that it is an emergency budget to save what can be saved, even if it is at the expense of the middle class in particular, because it is based on raising taxes and reducing public expenditures. Hunt's plan aims to collect an additional 55 billion pounds for the state treasury this year by raising taxes and cutting government spending.
Hunt admitted that the British economy is experiencing a real recession that may last until the end of 2023 at least, expecting that the inflation rate will continue at high levels and may decline to 7% during the next year. Hunt's tax plan sparked a lot of anger among the British, especially the decision to freeze the tax threshold for income exempt from this tax, set at 12,570 pounds sterling. This decision means that millions of people will enter the tax base, especially after raising the minimum wage, which will amount to 10 pounds sterling per hour.
Critics of this plan say that it is unfair to freeze the tax threshold, especially since the lowest-income group suffers from raising its income to match the inflation in the country, only to find itself forced to pay the tax. On the other hand, the threshold for the highest-income category has been reduced to move from 150,000 pounds sterling per year to 125,000 pounds sterling per year, and this category will have to pay a specific tax rate of 45%.
Under this plan:
Which means that more than 7 million people will pay more taxes in Britain.
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An exhausted economy
Chancellor of the Exchequer Jeremy Hunt acknowledged that the size of the British economy has shrunk by 1.4%. Indeed, the growth that the British economy has achieved during the past ten years will become news due to deflation, stagnation, inflation, and a decline in the quality of life. This reality is expected to lead to the loss of 500,000 people. their jobs this year.
And the matter would have been worse, according to the “Office for Budget Responsibility” “OBR”, which said that had it not been for the aid provided by the state to support energy bills, which amounted to 400 pounds per house distributed over 6 months, millions of families would have become helpless. able to pay energy bills.
Among the haunting files for treasury officials in Britain is the so-called “budget hole”, that is, the budget deficit estimated at about 50 billion pounds sterling, which the government seeks to bridge in any way, especially since the volume of public indebtedness is constantly rising and will reach 400 billion pounds sterling this year. .
With the exception of 3 government sectors, all government institutions will raise a reduction in their budget, starting with the international cooperation budget that was allocated to support poor countries and people suffering from wars and conflicts, as its allocations were reduced from 0.7% of the gross domestic product to only 0.5%.
On the other hand, the government announced maintaining a high level of defense spending, increasing allocations for the health sector by about 3.3 billion pounds during this year, as well as an increase of 2.3 billion pounds for the education sector budget.
satisfy investors
The lights are still on the financial markets to know their response to Jeremy Hunt's economic plan, and it appeared through the first hours that the markets dealt calmly with this new plan, with the exception of a slight decline in the value of the pound sterling.
Jeremy Hunt achieved his goal of restoring calm to the financial market after the storm it went through following the announcement of the "mini budget", proposed by Liz Terrace and causing a historic collapse in the value of the pound sterling.
The International Monetary Fund also commended the Rishi Sunak government's plan, and considered it "appropriate" to deal responsibly with taxes, protect poor families, and provide 55 billion pounds sterling for the state treasury. On the other hand, the political and media responses were indignant at this plan, which puts more tax pressure on the British in difficult circumstances. Many media reports agreed that the Conservative Party had turned into the "tax party", without real solutions to the problems of the British economy.