LONDON – British Chancellor of the Exchequer Jeremy Hunt set out plans to cut spending and raise taxes as he delivered his Autumn Statement on Thursday.
Below are key quotes:
ABOUT THE AHEAD CHALLENGE:
“Today we deliver a plan to tackle the cost of living crisis and rebuild our economy.” Our priorities are stability, growth and public service. We also protect the vulnerable because to be British is to show compassion and this is a compassionate Conservative government.”
ON THE BACK OF ENGLAND
“The Bank of England, which has performed brilliantly since independence, now has my whole-hearted support in its mission to beat inflation and I am confirming today that we will not change its remit.
“But we need fiscal and monetary policy to work together – and that means the government and the bank working in lockstep.” It specifically means giving the world confidence in our ability to pay our debts.”
ABOUT INFLATION FORECASTS
“The OBR forecast UK inflation to be 9.1% this year and 7.4% next year. They confirm that our actions today will help to reduce inflation significantly from the middle of next year. They also judge that Britain, like other countries, is now in recession.”
ABOUT GROWTH FORECASTS
“Overall this year, the economy is still forecast to grow by 4.2%.” GDP then declines in 2023 by 1.4%, before rising by 1.3%, 2.6% and 2.7% in the next three years. The OBR says higher energy prices account for the majority of the downward revision to the cumulative rate since March. They also expect the unemployment rate to rise from 3.6% today to 4.9% in 2024 before falling to 4.1%.
TEN TAX INCREASE
“On tax matters, I have tried to be fair by following two broad principles: First, we ask those who have more to contribute more; and secondly, we avoid the tax increases that harm growth the most.
“Although my decisions today will result in a significant tax increase, we have not raised general tax rates and taxes as a percentage of GDP will rise by just 1% over the next five years.
“Asking more from those who have more means that the first difficult tax decision I will make is to lower the threshold at which the 45p rate is payable from £150,000 to £125,140.” Those earning £150,000 or more will pay just over £1,200 more a year.”
“I am maintaining the current levels of personal income tax credit, the higher benchmark rate, the main social security thresholds and the inheritance tax thresholds for a further two years, taking us to April 2028.
“Dividend payments will be cut from £2,000 to £1,000 next year and then to £500 from April 2024. The annual capital gains tax exemption amount will be cut from £12,300 to £6,000 next year and then to £3,000 from April. 2024.”
“From January 1 until March 2028, we will increase the tax on energy profits from 25% to 35%.”
“The structure of our energy market is also creating windfalls for low-carbon electricity generation, so from 1 January we have also decided to introduce a new, temporary 45% levy on electricity producers.” Together, these taxes will increase by £14 billion next year.”
ON DEFENSE SPENDING/FOREIGN ASSISTANCE FUNDING
“We will continue to maintain a defense budget of at least 2% of GDP to be consistent with our NATO commitment.”
“The OBR’s forecast shows a significant blow to the public finances so that it will not be possible to return to the 0.7% target until the public finances allow.” We are fully committed to the target and the plans I have set out today, where ODA spending is expected to remain around 0.5% over the forecast period. (Reporting by Kate Holton and Suban Abdulla)