These measures mark the second major change in Britain's economic policy in just a few months, after British Prime Minister Leeds Tras promised to stimulate economic growth through more borrowing and tax cuts. This slutty operation caused a liquidity crisis in just 45 days, and then Tras became the shortest-time prime minister in British history. Trass' successor Rich Sunakis is now turning economic policy in another direction, trying to convince investors that Britain is serious about reducing rising government debt. The challenge he faces will be to regain market confidence without causing significant damage to the economy that is generally expected to enter a recession.
The shortest-lived Prime Minister in British history, Trass,
Exchequer Jeremy Hunter announced a cut of £55 billion (equivalent to about RMB 450 billion) in spending and tax increases over the next five years, trying to reduce the scale of government debt relative to the economy starting from the fiscal year ending March 2028. However, most of the spending cuts will come into effect after the 2025 British general election.
Hunter said in these measures he would raise taxes by freezing the threshold for people to pay higher tax rates, pulling thousands of people to the highest tax rate as their wages rise and inflation raises their wages. Next spring, the government will also reduce energy subsidies to households. At the same time, it increases unexpected taxes on energy company profits. To sum up, these measures mean that next year the tax burden in the UK will reach the highest level since World War II .
UK Treasury Secretary Jeremy Hunter announced his spending plan in Parliament on Thursday.
The UK's sharply restricted spending growth is the largest in a decade, which shows the economic challenges faced by some Western countries, after a significant increase in spending during the pandemic to protect its economy from damage, and new spending to help protect consumers and businesses from the impact of sharp rise in energy prices.
After Tras's ill-fated brief prime ministerial career hurt the pound, it caused the pound to fall to historic lows and government borrowing costs soared. Although the UK's debt level is not particularly high in GDP, the UK is also taking action, and the challenge is particularly serious for the UK, as it was the first economy to be challenged by financial markets due to fiscal issues, when Trass' comprehensive tax cuts triggered a strong reaction from the market. British Finance Minister Hunter is regaining investor confidence in the pound through a series of monetary policies .
UK Treasury officials said tax increases would reduce the necessity of Bank of England to raise the interest rate to a much higher level than the current 3%, thereby easing pressure on mortgage holders and businesses. But the Treasury must make a difficult adjustment: let the economy cool enough to lower inflation while unnecessarily exacerbating the recession. The Bank of England, which is in a dilemma, is in a dilemma. The failure of Trass to try to cut taxes is a warning to other governments not to stimulate the economy when inflation is already high. The Bank of England said that if Hunter's strategy succeeds, it may point out the way to reduce borrowing costs and inflation, but it may also backfire and push the British economy into a deeper recession.
During the epidemic, the British government's debt has risen sharply relative to the scale of the economy. Like other countries, it has spent hundreds of billions of dollars through a large amount of monetary policy to help the British people and businesses. According to International Monetary Fund data, UK government debt in 2021 is equivalent to 95.3% of GDP, compared with 121.8% in the United States, 112.6% in France, and 150.9% in Italy
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-