Britain’s new government unveils multibillion-pound measures on Friday aimed at supporting households and businesses hit by high inflation for decades. Finance Minister Kwasi Kwarteng, newly appointed by the new Premier Liz Trusswill deliver its mini-budget at 08:30 GMT.
Kwarteng announced on Thursday night that he would drop plans by Truss’ predecessor Boris Johnson to raise payroll taxes.
The news came after the Bank of England warned Britain was slipping into recession as soaring fuel and food prices took their toll.
“Fiscalizing our path to prosperity has never worked,” said the Chancellor of the Exchequer.
“To raise the standard of living for all, we must be unapologetic about growing our economy.
“Reducing taxes is crucial for this.”
It is also expected to reverse Johnson’s planned corporate income tax hike.
Kwarteng will also set out the cost of a decision to cap energy bills on Friday.
It could remove the cap on bankers’ bonuses, which has been in place since 2014 and is a legacy of EU membership.
Truss took office on September 6, two days before the death of Queen Elizabeth II, after winning an election of Conservative Party members on a platform of tax cuts.
While the tax cancellations are not strictly reductions, the government could announce reductions in levies on home purchases on Friday.
Analysts at UK bank Barclays estimate the cost of the government’s total package could reach £235bn ($267bn), far more than its pandemic jobs protection package.
CAPS ON ENERGY BILLS
Britain on Wednesday announced a six-month plan to pay around half of businesses’ energy bills.
Truss had already initiated a two-year home energy price freeze. The caps won’t come into effect, however, until Britons face another big hike in gas and electricity bills in early October.
The average household will see their annual energy bill capped at £2,500 until 2024, but many will have to spend more than that to keep homes warm through winter.
Wholesale electricity and gas prices for businesses – as well as charities, hospitals and schools – will be capped at half the expected free market cost.
British energy companies, including BP and Shell, will not benefit from the cap as they benefit from a surge in profits following the invasion of Ukraine by the major Russian oil and gas producer.
Britain’s main opposition Labor Party has demanded the government extend a windfall tax on energy companies that former finance minister Rishi Sunak launched earlier this year.
But Truss ruled out such a move, arguing that additional taxes would hamper economic recovery and efforts by energy groups to transform into greener companies.
Growth is at the heart of the new government’s policy, with Kwarteng on Wednesday presenting plans to overhaul the welfare system.
Some 120,000 people working part-time could face a reduction in benefits if they fail to take further action to seek more work, it is expected to confirm.
Kwarteng described the policy as a “win-win”, presenting it as a way to fill 1.2 million vacancies in the UK.
STRIKES, RATE RISES
With prices soaring, wage values are eroding, sparking some of the biggest strikes Britain has seen in over 30 years.
From railways to postal services to lawyers, tens of thousands of workers are taking industrial action to win higher wages.
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