Minister of Finance Dr United kingdomJeremy Hunt confirmed on Thursday that the country has already entered a recession and that efforts must be made to reduce the administration's debt.
Specifically, the Conservative Minister in the House of Commons presented the expected financial plan that the government will follow Rishi Sunak Aims to Increased collection by about 25,000 million pounds (28,555 million euros), while reducing public spending by about 30,000 million pounds (34,266 million euros). This plan will focus on three pillars: financial stability, economic growth, and protecting public services.
The increase in collection will be achieved, among other measures, by increasing the rate applied to extraordinary profits of energy companies, as well as – Reducing the threshold for the upper income tax bracket Which will put more bloggers in that tax bracket. Specifically, the department will start at 125,140 pounds (143,159 euros), compared to 150,000 pounds (171,600 euros) currently.
On the other hand, as confirmed in October. UK corporation tax increased to 25% from the current 19% From April 2023 – as agreed by the government led by Boris Johnson – against the initial proposal of the former Prime Minister, Liz Truss, who sought to reverse this tax increase.
Likewise, from January 1, 2023, tax will be imposed on Energy profits for oil and gas companies will rise from 25% to 35%It will remain in effect until the end of March 2028. This procedure differs from the procedure adopted by Spain, since Sanchez's extraordinary tax It taxes income rather than profits, generating arbitrary and excessive penalties for companies.
In addition, a new temporary tax of 45% will be imposed on electricity generators, while the minister announced that “as of 2025, a new tax will be imposed on electricity generators.” Road tax on electric vehicles So that all drivers start paying their fair share.” In addition, the tax-free earnings allowance will be reduced from £2,000 to £1,000 next year, and halved from April 2024, while the annual profits tax relief amount will be reduced. Capital will be reduced from £12,300 to £6,000 next year and up to £3,000 from April 2024.
Recession in 2023
Appearing before the British Parliament, the Chancellor of the Exchequer confirmed the Office for Budget Responsibility's forecast that the UK's GDP would expand by 4.2% this year, compared to 3.8% forecast in March. . All this despite his declaration that the country has already entered a recession. Moreover, indicators are progressing GDP contraction of 1.4% in 2023, compared to previously expected growth of 1.8%. Longer term, the Office for Budget Responsibility forecasts for UK GDP to grow by 1.3% in 2024, eight-tenths lower than previously expected.
Regarding the rampant inflation that the country is suffering from, the British government’s new macroeconomic picture predicts a… Prices will rise by 9.1% in 2022higher than the March forecast of 7.4%, which will moderate in 2023 to 7.4%, instead of the previously expected 4%.
In his appearance, the British Chancellor defended that the autumn tax return represents a… “The balanced path to stability”With a total fiscal consolidation of around £55,000 million (€62,919 million), which implies “Making difficult decisions”.
“There is a global energy crisis, a global inflation crisis, and a global economic crisis,” Hunt said. “But today with this plan for stability, growth and public services, we will weather the storm. And we are doing so today with British resilience and British compassion.” defend.
“Anyone who says there are easy answers is not being honest. The minister defended the British people: “Some support cutting spending, but that will not be compatible with high-quality public services,” while making sure that “High taxes hurt business and erode freedom.”.
So the solution involves a combination of two necessary evils: raising taxes and cutting spending. “It is a balanced plan to achieve stability,” he added.
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