Can Jeremy Hunt fix the UK economy and get it running on all cylinders again? Watch the STRICTLY BUSINESS debate
Chancellor Jeremy Hunt donned his sackcloth for his autumn statement and presented a tax and spending plan designed to curb inflation and restore stability.
The big question as Britain enters recession is can Hunt save the UK economy and revive it? Ruth Sunderland and Alex Brummer debate it on Strictly Business.
At the heart of Jeremy Hunt’s package were savage tax hikes for businesses and ordinary citizens.
Middle-income taxpayers are particularly affected by an extension of the tax relief freeze until 2027-28. This measure will push millions of people into higher tax brackets in a process known as the “fiscal drag”.
The consequence is that taxes as a percentage of national output will rise to 37.1% of national output over the next few years, which the independent monitor, the Office for Budget Responsibility (OBR), describes as the longest period. “sustained” high taxation. since World War II.
Although the Chancellor has sought to portray his measures as pro-growth, backing major investment programs such as £700m for a new nuclear power project at Sizewell C in Suffolk, he has still distant from Liz Truss’ plans for a supply-side tax reduction on the agenda because it is possible to travel.
By hitting businesses with higher taxes, with energy companies and power producers hit hardest, he bets that companies value calmer markets more than incentives to invest.
There is a real risk that the combination of tax hikes and Bank of England interest hikes could result in a deeper and longer recession than makes sense in the current turbulent global circumstances where the war is taking place in the heart of Europe.
In the recent past, OBR forecasts have often been off target and faster-than-expected production has generated higher tax revenues, creating unexpected headroom for the Treasury.
This time around the OBR’s projections for the economy are more optimistic than the Bank of England and it predicts a one year recession against the Bank’s two years with a recovery starting in the final months of 2023 .
However, the high costs of the energy price guarantee, extended until next winter with a higher cap of £3,000, as well as an inflation-matching increase in state pensions and most benefits mean borrowing will reach £177bn in 2022-23.
Hunt sought to wink at Britain’s brilliant research universities and innovation with a promise to maintain tax breaks for research and development that seemed under threat.
By deciding to bet on restoring stability above all else, Rishi Sunak and Jeremy Hunt have overcooked the fiscal shock for ordinary people. They also stifle entrepreneurship and entrepreneurship by harshly cracking down on capital gains taxes.
Hunt’s was a financial statement built on Treasury orthodoxy that could just as easily be issued by a Labor Chancellor.
Strictly Business: watch the debate