Autumn budget ‘to hurt’ warns Liam Halligan
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Chancellor Jeremy Hunt is expected to unveil his package of new economic measures to try and curb inflation after Liz Truss’ disastrous mini-budget. The autumn statement is poised to contain a harsh package of tax rises and spending cuts to plug a fiscal hole of £60billion. Warning the budget will “hurt” everyone across the board, GB News Economic and Business Editor predicted Jeremy Hunt could fill the deficit with stealth taxes.
GB News Economic and Business Editor Liam Halligan said: “I don’t think there are going to be big headline tax rate increases today.
“What there will be is what we call stealth taxes – freezing tax thresholds, keeping allowances where they are even though inflation is going up, dragging more people into higher tax brackets.
“It is going to hurt.”
In the aftermath of the economic turmoil triggered by Liz Truss’ disastrous mini-budget, Jeremy Hunt’s options are limited.
He and Prime Minister Rishi Sunak warned that “difficult decisions” will need to be made to restore the UK’s economic credibility to foreign markets.
The cost of government borrowing soared following former Chancellor Kwasi Kwarteng’s announcement and increases slightly after Rishi Sunak delayed the announcement of Jeremy Hunt’s autumn statement.
According to Resolution Foundation economic think tank, Mr Sunak and Mr Hunt face the thankless task to find at least £40billion. That is likely to involve spending cuts of about £34billion and tax rises of around £20billion.
To achieve that result, the Chancellor will dismantle much of what his predecessor Kwasi Kwarteng announced in his mini-budget, which sent shockwaves throughout the economy and had the pound drop to an all-time low against the dollar.
One significant measure could be stealth taxes which freeze the tax rates at which people start paying different taxes. In essence, that means tax brackets will remain the same until 2028 – 0 percent for the lowest-paying jobs, 20 percent for the basic rate, 40 percent for the higher rate and 45 percent for the top earners.
Liz Truss and Kwasi Kwarteng previously wanted to scrap the highest tax bracket for top earners.
In another major U-turn to his predecessor, Jeremy Hunt could expand the Windfall Tax on the profits of oil and gas companies that was introduced by Rishi Sunak during his time as Chancellor under Boris Johnson’s Government.
It currently sits at 25 percent. Treasury officials are reportedly exploring increasing the rate of the tax by 10 percent to 35 percent.
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The Conservative government is likely to fulfil its 2019 manifesto pledge and index pensions and benefits to the rate of inflation. Under the triple lock, the state pension increases each year in line with whichever of these three measures is highest: inflation, the average increases in wages across the UK or 2.5 percent.
If Rishi Sunak’s Government stands by the manifesto pledge, pensions will increase by 11.1 percent in line with inflation. Inflation hit a 41-year high in October, rising to 11.1 percent according to the Consumer Prices Index (CPI).
Inflation has been pushed up by higher gas, electricity and food prices. Given the dire economic outlook, the Bank of England has warned the country is heading for the longest recession since records began.
The Chancellor is also expected to lift the energy cap from £2,500 to an estimated £3,000-£3,100, meaning struggling households will be exposed to higher energy bills.
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