Sunak promises financial stability, while Hunt warns of tax increases for everyone

British Prime Minister Rishi Sunak. (Photo: EPA)

Prime Minister Rishi Sunak stated that this week's autumn budget will meet market expectations, while his Chancellor cautioned that everyone will need to pay "a little bit more tax" to stabilize the economy.

Mr. Sunak stated that measures to be unveiled by Jeremy Hunt on Thursday would "put our public finances on a sustainable trajectory" after his predecessor's £45 billion ($53 billion) tax-cutting bonanza alarmed investors.

The statement will be anticipated to include painful public spending cuts and tax increases to close a financial gap.

Mr. Hunt previously stated that everyone must make sacrifices to get the economy back on track.

However, some members of the Conservative Party have criticized the planned tax increases, with former leveling up secretary Simon Clarke calling for the budget to be balanced through spending cuts.

Former chancellor Kwasi Kwarteng, whose mini-budget was estimated to have cost the country as much as £30 billion, stated that "raising our taxes" would not result in growth.

Mr. Sunak stated on the plane to Indonesia for the G20 summit that the financial situation in the United Kingdom had "clearly" stabilized.

"However, they have stabilized because the public expects the government to make the decisions that will put our public finances on a sustainable path, and it is the government's responsibility to do so," he said.

This is precisely what the Chancellor will do.

Mr. Sunak acknowledged the dire economic situation the country was in after the gross domestic product decreased by 0.2% between July and September, potentially signaling the beginning of a recession.

He emphasized the need to "meet the expectations of international markets" to "ensure that our fiscal position is on a more sustainable trajectory."

Mr. Sunak stated that the objective was to "lay the groundwork" for growth so taxes could be reduced "over time."

"The Chancellor has also stated that part of our job is to lay the groundwork for the economy's recovery and growth," he stated.

This is how we can reduce people's taxes over time while maintaining public services. "The Chancellor will also address this aspect of the situation."

Mr. Sunak will return to the United Kingdom from the summit of world leaders in Bali just in time for Thursday's budget.

At the summit, he intends to urge leaders to "step up to fix the weaknesses in the international economic system" and to convince them that he will restore domestic economic stability.

Mr. Hunt has stated that "those with the broadest shoulders will bear the heaviest burden" as he is rumored to be contemplating a reduction in the income threshold at which the highest earners begin paying the top tax rate.

According to The Observer, economists at the Resolution Foundation think tank estimate that former prime minister Liz Truss and Mr. Kwarteng wasted £20 billion on unfunded cuts to national insurance and stamp duty and an additional £10 billion on higher interest rates and government borrowing costs.

Mr. Sunak dodged questions at the G20 summit about whether that figure was accurate and whether he would use the United Kingdom's recent experience as an example of how things could go wrong.

"I believe I mentioned on the steps of Downing Street that errors had been made and that one of the reasons I became prime minister was to rectify this," he said.

He cited global economic issues such as the Covid pandemic and Russia's invasion of Ukraine.

"These are shared challenges, and what I will discuss with other leaders at the G20 is what everyone is doing in their respective countries and internationally to ensure the resilience and stability of the financial system."

Publish : 2022-11-14 07:59:00

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