Millions of British people face higher taxes and steeper energy bills after the government announced an emergency budget on Thursday aimed at restoring the country’s economic credibility and shoring up its battered public finances.
Treasury chief Jeremy Hunt said a string of tax increases and tighter public spending in the budget plan was needed after the blow dealt to the country’s fiscal reputation by former Prime Minister Liz Truss.
Outlining a 55-billion-pound plan ($65 billion) – almost half from tax rises – to fix the public finances, Hunt said the economy was already in recession and set to shrink next year as it struggles with inflation forecast to average 9.1% this year and 7.4% in 2023.
Britain’s independent Office for Budget Responsibility (OBR) said rising prices would further erode people’s wages and reduce living standards by 7% by April 2024 – the year a national election is expected – wiping out growth over the eight years to 2022. Millions of Britons are already struggling with a cost of living crisis.
The tax burden would hit 37.1% of gross domestic product (GDP), its highest sustained level since World War II, at the end of its five-year forecast period, the OBR said, up from 33.1% in the 2019-20 tax year.
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