UK Chancellor of the Exchequer Jeremy Hunt has applauded his plan to speed up a stagnant economy as tens of thousands of workers furious with the government went on strike calling for better working conditions and wages that would enable them to cope with a worsening of the economy. crisis in the cost of living.
Hunt on Wednesday unveiled childcare and tax reforms to get more people into work and corporate tax breaks to encourage low business investment as he presented his budget in parliament to mockery from the opposition Labor Party, which ranks high in opinion polls in the run-up to an election next year.
Hunt also said he would provide relief to households hit by skyrocketing utility bills and freeze a tax on fuel.
The finance minister said the world’s sixth-largest economy is now expected to avoid a recession this year, even if it continues to contract.
“In the face of enormous challenges, today I report on a UK economy that proves the doubters wrong,” said Hunt.
“We made tough decisions in the fall to ensure stability and sound money,” said Hunt, who was appointed in October to head the Treasury and reverse the tax cut plans that brought chaos to Liz Truss during Liz Truss’s short premiership. seeded the financial markets.
“Since mid-October, 10-year government bond rates have fallen, redemption costs have fallen, mortgage rates are lower and inflation has peaked,” he told parliament. “The International Monetary Fund says our approach means the UK economy is on the right track.”
After the shocks of Brexit, COVID-19 and double-digit inflation, the UK economy is the only one of the Group of Seven countries to have recovered to its pre-pandemic size after almost a decade of near-stagnant income growth.
Hunt and Prime Minister Rishi Sunak resisted calls from some lawmakers in the ruling Conservative Party for major tax cuts, focusing instead on debt rules announced late last year to calm chaos in UK bond markets.
But Hunt found money to extend government subsidies on household energy bills for another three months and a 10-year fuel tax freeze for another year.
He also announced a new business investment incentive that would allow companies to offset 100 percent of their capital expenditures against profits, though this represented a pushback from tax breaks under a previous two-year scheme.
Other measures included more investment in nuclear energy.
Hunt said the government would add £11bn ($13.3bn) over the next five years to the defense budget, which has been stretched by Britain’s support of Ukraine in its war with Russia.
‘It’s just a car accident’
Al Jazeera’s Jonah Hull, reporting from Leamington Spa in the English Midlands, said the new budget was announced as families and businesses were “crying out for help” across the country.
“The focus of this budget is on restoring confidence in the government and the stability of public finances,” he said.
In the last few months, as public anger has increased, union action has surged across Britain.
Thousands of teachers, doctors, public transport workers and other workers again walked from their jobs in protest on Wednesday, calling on the government for fair pay and working conditions.
Rebecca Lissman, 29, an obstetrics and gynecology intern, said trainee doctors only ask for “a wage that matches our skills.”
“I want to be at work, take care of people, get educated,” she said. “I don’t want to be conspicuous here, but I feel I have to.”
Outside St Thomas’ Hospital in central London, Leah Sugarman, 33, joined other strikers as they chanted: ‘What do we want? Fair pay! When do we want it? Now!”
The emergency room physician, who has been on the job for nine years, said she cannot afford a mortgage and is struggling to live a normal life.
“We have all been through COVID – that was terrible. Most of us came out of that mentally scarred,” she said. “And every day I leave work I almost want to cry because I haven’t been able to do the job I chose to go into this profession.”
She added that she was forced to reduce her working hours to less than 40 hours a week “because I can no longer mentally work full time”.
“It’s just a car accident,” she said. “So that’s why I’m here.”
Recession avoided, simply
According to a new set of forecasts, gross domestic product is projected to shrink by 0.2 percent in 2023, instead of the 1.4 percent contraction predicted in November by the independent Office for Budget Responsibility (OBR).
Since then, energy costs, which soared after the Russian invasion of Ukraine, have fallen, and there are signs of recovery in some economic data.
“Today, the Office for Budget Responsibility predicts that due to changing international factors and the actions I am taking, the UK will not slide into a technical recession this year,” said Hunt.
The OBR predicted economic output would grow 1.8 percent in 2024 and 2.5 percent in 2025, Hunt said, compared to previous forecasts for growth of 1.3 percent and 2.6 percent, respectively.
“Despite continued global instability, the OBR reports today that inflation in the UK will fall from 10.7% in the last quarter of last year to 2.9% by the end of 2023,” said Hunt.
Many economists have said Hunt likely wants to withhold some fiscal firepower to get closer to the next national election, but Wednesday’s forecasts underscored the limits of the government’s options going forward.
They showed that Hunt’s target of reducing the UK’s £2.5 trillion ($3 billion) of debt as a percentage of GDP within five years was on track to be met with a buffer of just 6 .5 billion pounds ($7.85 billion).