Jeremy Hunt, Britain’s top financial official, will lay out his tax and spending plans for the country on Wednesday in a speech that will try to deliver a blueprint for economic growth — while avoiding any surprises that could shake Britain’s restored but fragile fiscal credibility.
Mr. Hunt, the chancellor of the Exchequer, is expected to focus on his stated goal of getting “hundreds of thousands” more people into jobs. There is growing concern in the government that lower work force participation since the pandemic is holding back the British economy, as people take early retirement or are sidelined by the rising cases of long-term physical and mental illness.
In the annual Spring Budget speech in the House of Commons, Mr. Hunt is also expected to detail how he hopes to help the prime minister, Rishi Sunak, achieve his promise of economic growth this year amid an annual inflation rate of 10.1 percent, rising interest rates and widespread labor strikes.
The government will create sustainable economic growth by “removing the obstacles that stop businesses investing, tackling the labor shortages that stop them recruiting, breaking down the barriers that stop people working” and making Britain a “science and tech superpower,” Mr. Hunt will say, according to prereleased remarks.
He has already announced some plans to tackle what he describes as Britain’s “economic inactivity problem,” including changes to the way child care costs are paid to people receiving state benefits, revisions to how people with disabilities are assessed for work and additional money for skills training for people over 50.
Labor Organizing and Union Drives
Mr. Hunt was named chancellor in mid-October, during the turmoil of Liz Truss’s premiership, to try to calm financial markets. After scrapping almost all of Ms. Truss’s economic agenda, he was kept in his position by Mr. Sunak as the new government worked to restore Britain’s fiscal credibility. Both men have since focused on being seen as competent and, frankly, boring, compared with their predecessors.
The economic outlook in Britain, as in many other advanced economies, has improved in the past few months because of lower wholesale natural gas prices and some surprising resilience by consumers and businesses.
Britain’s public finances look stronger in the short term because of higher income-tax revenue and lower expenses for energy subsidies.
Still, the British economy is stagnating. And the outlook further ahead is weak, as economists lower their expectations for growth in the labor market and Brexit continues to hamper many businesses. Given Mr. Hunt’s commitment to reducing Britain’s debt as a share of its gross domestic product, economists do not believe he has much room to make big changes to taxes and spending.
Early on Wednesday, the Treasury said that it would extend the government’s subsidy for household energy bills by three more months, until the end June, which caps the average annual cost at £2,500.
And then there are the demands for higher pay by public workers. As Mr. Hunt delivers his speech, junior doctors who work for the National Health Service, transit workers, some civil servants and teachers will be on strike.
The National Institute of Economic and Social Research, a London think tank, said the government should outline plans on Wednesday to increase public-sector pay. As the wage gap between the public and private sectors remains wide, the institute noted, high inflation eats away at pocketbooks.
If public wages don’t catch up, “the government risks incurring further losses from prolonged industrial action or an outflow of skilled public-sector workers,” Paula Bejarano Carbo, an economist at the institute, said in a statement.
Source: Read Full Article