UK Chancellor Jeremy Hunt outlines billions in tax hikes and austerity measures as country slips into recession

The UK has officially entered a recession that will put more than 500,000 people out of work, according to a new forecast by the Office for Budget Responsibility (OBR).

The (OBR), the government’s forecaster, said there would be the biggest drop in UK living standards on record with inflation pushing the economy into recession for just over a year.

The forecaster said he expected household incomes, once adjusted for inflation, to fall back to 2013 levels and take at least six years to recover.

Britain is suffering economically from Brexit, the effects of the pandemic, an ongoing energy crisis exacerbated by the conflict in Ukraine, and the disastrous fiscal policies of the previous Conservative government.

British Chancellor Jeremy Hunt today set out a series of tax increases and a tougher government spending plan in his autumn inauguration statement which he believes will raise a total of £55bn.

The tax return included a reduction in the threshold for the top income tax rate of 45p from £150,000 to £125,000. The government also raised and expanded a windfall tax on energy company profits, which soared in the wake of Russia’s invasion of Ukraine. Even electric vehicles are no longer exempt from vehicle tax.

Hunt confirmed that the government’s energy price guarantee, which caps typical electricity bills at £2,500 until April, will be extended for a further year. However, the ceiling will be raised to £3,000, with low-income households receiving additional means-tested support. There was an unexpected increase in funding for health and education, with £2.3bn announced for schools and £3.3bn for the NHS. Hunt also increased the National Living Wage from £9.50 to £10.42 an hour.

The immediate aim of Hunt’s statement was to plug the country’s growing hole in finances and restore confidence in Britain after his predecessor, Kwasi Kwarteng, gave Liz Truss a 45 billion tax cut to her job.

Hunt said the measures would reassure markets that the government and Bank of England were now working in “lockstep”.

“We need fiscal and monetary policy to work together,” he said.

Labour’s shadow chancellor Rachel Reeves opposed Hunt’s plans, saying Britain’s current financial struggles were “creating a crisis in Downing Street”, referring to the failed Truss and Kwarteng budgets.

“The chancellor should have come today and asked for forgiveness. At least he could have apologized. But no,” Reeves said. “The country has only been billed for the economic carnage the government has caused. Never again can the Conservatives claim to be the party of economic literacy.”