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The British government is making drastic cuts in spending. The country is cutting spending by more than 30 billion pounds (34 billion euros) and also raising taxes by around 24 billion pounds.
UK Chancellor of the Exchequer Jeremy Hunt and new Prime Minister Rishi Sunak must restore financial markets’ confidence in the UK government.
Sunak’s predecessor, Liz Truss, presented plans in September, but they caused a lot of turmoil. The Bank of England had to intervene several times to avoid major problems and Truss had to leave the pitch after a few weeks. His plans were reversed.
Hunt’s plans, which have also just begun, include higher taxes for middle-income people and energy companies. The lower limit of the highest tax bracket will be lowered.
The UK government also wants to levy more tax on dividend income. This decision is striking, given that Shell and Unilever have recently decided to become fully British. More favorable dividend rules in the UK probably played a part in this.
In addition to the higher taxes, there are also savings of 30 billion pounds. The National Health Service NHS remains unchanged.
The UK is also struggling with high inflation. For example, it was announced on Wednesday that goods and services were on average 11% more expensive in October than a year earlier. This is the highest level for more than forty years. According to Hunt and Sunak, tackling high inflation is the top priority.
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