In the House of Commons, Hunt presented the “terrible decisions” he had to make. Many more wealthy Britons will end up in the top tax rate of 45 per cent, while the lower paid will be hit by the tax-free base freeze. The number of middle-class households entitled to child benefit will shrink now that the income threshold for this will be 68,000 euros. Municipalities are allowed to raise local taxes.
The tax pain doesn’t stop there. Owners of electric cars will pay road tax for the first time and people who sell their house for a profit will pay more transfer tax. More popular is Hunt’s decision that energy companies will temporarily pay more tax on their profits early next year. Government expenditures are rising slightly in absolute terms, but are falling proportionally. Public health is spared.
Tame inflation
Speaking to his skeptical party colleagues, particularly those on the right, the Conservative minister argued that these far-reaching decisions are necessary “to tame inflation”. This is now 11 percent and, according to Hunt, mainly affects the poorest Britons. Thanks to these measures, the government debt as part of the Gross National Product will gradually decrease. “As Conservatives, we don’t pass on debt to the next generation,” he claimed in the packed parliament.
From a political perspective, the Conservatives want to move away from the economic policies of Liz Truss, who resigned last month, who wanted to borrow money to fund big tax cuts and increase government spending. The financial markets immediately panicked. Hunt’s budget has been called a “memorial service for Trussonomics.” Where Truss wanted to favor the rich, Hunt focuses especially on the poorer British.
He stressed that the Conservative Party should show compassion for the less fortunate. In this way, the energy support will be maintained throughout the coming year. The rent increases for social tenants will be curbed and, according to him, the social minimums will not deteriorate. He does, however, want to link receiving assistance for the disabled to actively looking for work. He received cheers from his own circle at his promise to keep pensioners, regardless of their assets, out of harm’s way.
Nuclear power plant
Taxation and cutbacks go hand in hand with investment. For example, he announced that the British government will finance the construction of a nuclear power station on the North Sea coast in Suffolk for the first time in thirty years. Investments in infrastructure will also continue. The construction of a high-speed line between London and the north of the country, costing more than a hundred billion euros, is being completed, although there are growing doubts about the return.
Hunt placated the Brexiteers by saying that the government wants to make use of the ‘Brexit freedoms’ by scrapping rules in the areas of green industry, financial services, high-quality manufacturing, digital investments and life sciences. He believes Britain should become the new Silicon Valley, but he does not give details on exactly how this can be achieved.
The UK economy is already in a mild recession. Hunt attributes this to the corona measures and the Russian invasion of Ukraine. In addition, the UK economy is still experiencing the aftermath of the 2008 financial crisis, which was followed by years of austerity. On top of that is Brexit, a choice that has led to less investment and problems in trade with the European Union.