Government options to reduce public debt

Rishi Sunak is embarrassed. The British Chancellor of the Exchequer this Wednesday, 27 October, will unveil his budgetary guidelines for the next three years and his budget for the end of the current fiscal year, which traditionally runs from April to April. A good-looking conservative, the finance manager intends to rebalance public accounts after the government’s intervention to support the economy since the start of the Covid-19 pandemic in March 2020. ” The government’s response has resulted in a significant increase in borrowing and credit, which are necessary and affordable in the short term, but will not be sustainable in the long term. “, he warned in April. In fact, the deficit widened to 14 per cent of GDP.

→ read. Boris Johnson wants to “pull his country up”

After the 2008 financial crisis, his party began an austerity policy as soon as it came to power in May 2009. The measures of David Cameron and George Osborne were in line with the Thatcharist mantras that are still central to the Orthodox ideal. Reduction in taxes and the role of the state. Twelve years later, Rishi Sunak would find it difficult to follow the same strategy. Prime Minister Boris Johnson has really done the job of bringing the country up to the standard of his main political line. Its realization includes, in particular, support for the lowest-paid workers and maintaining the level of public services needed.

Inflation at 3%

In fact, the finance manager announced an increase of 6.6% of the minimum hourly earnings to £9.5 (€11.2) in a press release on Monday, 25 October. For a full-time employee paid at the minimum wage, ie working at least 35 hours per week, this corresponds to an increase of €1,275 per year. Proof in the eyes of the politician that Government is in favor of workers ».

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This increase is intended to counter the significant increase in the cost of living recorded in recent months: inflation reached 3% in August, 2.9% in September and should continue to rise in the coming months. The decision also makes it possible to counter the bad publicity surrounding the extraordinary increase of £20 (€22) in weekly social assistance paid to the poorest families at the end of October. And it can also happen when many families find themselves unemployed or less prosperous with part-time jobs.

tax increases

Rishi Sunak is also expected to support the already announced tax hike: In April, the finance manager had already warned that corporate income tax would be temporarily reduced from 19% to 25% from fiscal year 2023.

In September, Boris Johnson announced a 1.25% increase in social contributions to finance the health system. At the beginning of the week, forty millionaires sent him a letter, made public, calling for the introduction of wealth tax ” To help pay for recovery and tackle the growing inequality hole (…) so that the cost of recovery does not fall on young people or low wages. “. This option will not materialize. Yet another tax hike will take the Conservative ranks too far.

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About the Author: Forrest Morton

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