An unprecedented budgetary tightening against a backdrop of gloomy economic prospects: on Thursday 17 November, the British Prime Minister, Rishi Sunak, and his Chancellor of the Exchequer, Jeremy Hunt, presented a particularly bitter “autumn budget” for the British. Mr Hunt has admittedly carefully avoided talk of austerity, but with £55billion (€63billion) a year in savings planned over the next five years, more taxes and restricted public spending , the potion is hard to swallow for individuals and businesses. It is all the more so as the country is entering a recession and, according to the gloomy forecasts of the Office for Budget Responsibility (the national budget forecasting agency), British households will become poorer than ever since. six decades: their income will decline by 7% over the next two years, erasing all their gains of the last eight years.
Why is the United Kingdom choosing such a remedy when the other European economies are instead trying recovery plans to counter a downturn in the economy linked to the war in Ukraine and the consequences of the pandemic? Let’s take a step back: just two months ago, the British government announced, as part of an aptly named “mini-budget”, huge tax giveaways for the wealthiest households (around 45 billion pounds sterling in tax cuts), financed by public debt. The markets suddenly rocked: the pound slid against the dollar, the cost of British public debt soared, as did mortgage interest for individuals.
“Operation rescue” of the economy
The Chancellor of the Exchequer, Kwasi Kwarteng, was replaced in mid-October by Jeremy Hunt, 56, a former Theresa May health minister, renowned for his calm and seriousness. Prime Minister Liz Truss did not resist much longer: she resigned on October 20 and the very pragmatic Rishi Sunak, 42, former Chancellor of the Exchequer to Boris Johnson, succeeded her five days later in Downing Street. Since then, almost all the mini-budget measures have been canceled and the Sunak-Hunt tandem has promised to ” correct the mistakes “ of their predecessors to restore the country’s reputation for fiscal seriousness. Priority is now given to financial stability, to reducing the share of debt in the national gross domestic product and to the fight against inflation (it reached 11.1% over one year in October).
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