Published on : 23/09/2022 – 23:09
The British economy is not in its best shape. Inflation there is flirting with 10%, the Bank of England has announced a recession for the 2nd and 3rd quarters of 2022, household confidence is at half mast and the pound sterling is at its lowest in 37 years against the dollar, while energy prices continue to rise. In an attempt to stop this “vicious circle” and achieve a growth rate of 2.5%, the government of Liz Truss has adopted a series of exceptional measures.
In front of British parliamentarians, Chancellor of the Exchequer Kwasi Kwarteng announces the measures adopted by the government of Liz Truss, a £150 billion plan including the freezing of energy bills and above all, a long list of tax cuts . In fact, the program is the biggest tax cut since 1972.
For individuals whose energy bills have skyrocketed. Between April and October 2022 electricity bills will even have tripled in the UK. To remedy this, the executive decided to freeze energy bills for 2 years, at £2,500 for average households, which represents a discount of at least £1,000. Businesses faced with the same problem will benefit from coverage of 50% of their invoices, but for only six months. In total, this measure should cost 60 billion pounds for the first six months.
Biggest tax cuts since 1972
This program is accompanied by numerous reductions in taxes and duties. First, the government has planned to reduce the social contributions of households and businesses. Levies dedicated to ecology will be the first losers, since they are among those who will be suspended. The tax on real estate transactions will also be lowered, and the maximum income tax bracket will also be lowered, from 45% to 40%. There is also talk of creating “38 deregulated investment zones”, somewhat in the light of the free pot projects of Boris Johnson’s government.
To restore the City’s attractiveness and once again make London a leading financial centre, Kwasi Kwarteng also announced the end of the cap on bankers’ bonuses. They had been restricted to a maximum of 200% of annual salary after the 2008 financial crisis.
The return of Thatcher-style liberalism?
On the job side, the Chancellor of the Exchequer intends to “get Britain back to work” while many jobs are not filled. For this, Kwasi Kwarteng wants to combine access to minimum income with obligations for certain people who work less than 15 hours a week.
As for the right to strike, the Conservative government wants to regulate it further, to “guarantee that strikes can only be called when negotiations have really broken down”. Those last weeks, walkouts have increased in the UK, at a rate not seen in the country in more than 30 years. in front of the significant rise in prices which lowers the value of wagesmany corporations went on strike, from railway workers to post office workers to lawyers.
This series of measures has in any case been criticized by the Labor opposition, which sees in it the return of the ultra-liberal doctrine dear to Margaret Thatcher in the 1980s. British Prime Minister Liz Truss has moreover acknowledged that this policy especially favor the better-off.
Economists are worried that the mixture of tax cuts and massive aid, financed by public debt, could prove to be toxic for the finances of the British State.