Karim El-Bar
17 November 2022•Update: 17 November 2022
LONDON
Britain’s Treasury chief on Thursday unveiled his much-anticipated autumn statement on economic policy to parliament, confirming from the start that Britain is in recession.
On Wednesday, it was announced that inflation hit a 41-year-high at 11.1%, further escalating an already bitter cost-of-living crisis.
Britain’s economic credibility was trashed in recent months by a mini-budget announced by the previous government.
“Anyone who says there are easy answers are not being straight with the British people,” said Jeremy Hunt, chancellor of the exchequer.
Hunt said his aim is to prioritize “stability, growth and public services” while seeking to plug what the government identified as a £55 billion ($64.8 billion) hole in Britain’s public finances.
The threshold for the top tax rate was slashed from £150,000 to £125,140, drawing more people into the highest bracket.
Electric cars will no longer be exempt from the vehicle duty tax as of April 2025, and the windfall tax on energy companies will be increased from 25% to 35%, in addition to a new 45% levy on electricity generators.
Over the next two years, the National Health Service budget will increase by £3.3 billion, and adult social care will receive a £1 billion grant next year, and £1.7 billion the year after, in an effort to free up hospital beds.
The pensions “triple lock” will remain in place, meaning pensions will increase in line with inflation, as will benefits and the state pension.
The national living wage will also increase by 9.7%, so that from April 2023 the hourly rate will be £10.42.
Schools will see an extra £2.3 billion in investment per year for the next two years.
Rents in the social renting sector will be capped at 7%.
Hunt confirmed that a previously approved new nuclear plant will go ahead, and that a year from April the energy price guarantee for the average household will increase from £2,500 to £3,000.
On defense, Hunt said spending would remain “at least 2% of GDP” in line with the UK’s NATO commitments, and said Britain’s integrated defense review would be updated to take into account Russia’s war on Ukraine before the next full budget before deciding how much to increase defense spending.
Overseas aid, which was slashed from 0.7% to 0.5% of GDP during the pandemic, will remain at this lower level for the time being, though the government remains committed to returning to its 0.7% target when economic conditions allow.
