British Prime Minister Rishi Sunak said this week’s autumn budget will meet market expectations as his Chancellor warned that everyone will have to pay “a little more tax” to stabilize the economy.
Mr Sunak said the measures to be unveiled by Jeremy Hunt on Thursday would ‘put our public finances on a sustainable path’ after investors were left baffled by the £45billion (£53billion) tax cut bonanza. dollars) of its predecessor.
The statement is expected to include painful public spending cuts and tax hikes to fill a hole in the nation’s finances.
Mr Hunt said earlier that sacrifices were needed at all levels to get the economy back on track.
But the planned tax hikes have drawn criticism from some Conservative Party quarters, with former leveling secretary Simon Clarke calling for the books to be balanced by spending cuts.
Former Chancellor Kwasi Kwarteng, whose mini-budget has been estimated by economists to have cost the country up to £30billion, said growth will not come from ‘raising our taxes’.
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On the plane to Indonesia for the G20 summit, Mr Sunak said financial conditions in the UK had “clearly” stabilized.
“But they have stabilized because people expect the government to make the decisions that will put our public finances on a sustainable path, and it is the job of the government to make that happen,” he said. declared.
“And that’s what the Chancellor will do.”
Mr Sunak said he recognized the dire economic situation facing the country, after gross domestic product contracted by 0.2% between July and September, potentially marking the start of a recession.
He stressed the importance of “meeting the expectations of international markets” to “ensure that our fiscal position is on a more sustainable path”.
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Mr Sunak said the plan was to “lay the groundwork” for growth so that taxes could be reduced “over time”.
“The Chancellor also said that part of our job is not just to bring stability back to the system, which we will do, but also to lay the foundations for the recovery and growth of the economy,” he said. he declared.
“That’s how we can lower people’s taxes over time and support public services. And you’ll also hear that side of the equation from the Chancellor.
Mr Sunak will return to the UK after leaders of major economies gather in Bali just in time for Thursday’s budget.
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At the summit, he aims to urge leaders to “intensify their efforts to correct the weaknesses of the international economic system” and to persuade them that he will restore stability to the national economy.
Mr Hunt said ‘those with the broadest shoulders will bear the heaviest burden’ as he considered reducing the threshold at which the highest earners start paying the highest rate of tax.
Economists at the Resolution Foundation think tank estimate former Prime Minister Liz Truss and Mr Kwarteng spent £20billion on unfunded National Insurance and stamp duty cuts, with £10billion additional lost due to rising interest rates and government borrowing costs, The Observer reported.
At the G20 summit, Mr Sunak dodged questions about whether that figure was correct and whether he would use the UK’s recent experience as a lesson on how things could go wrong.
“I think I said on the steps of Downing Street that mistakes were made and part of the reason I became Prime Minister was to fix that,” he said.
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He pointed to global economic challenges such as soaring inflation after the Covid pandemic and Russia’s invasion of Ukraine.
“These are common challenges and what I will be talking about at the G20 with other leaders is what everyone is doing in their own countries and internationally to ensure the resilience and stability of the financial system.”
Updated: November 14, 2022, 01:12