The presentation of the UK government’s revised budget for 2023 on November 17 was the first major test for Chancellor of the Exchequer Jeremy Hunt since his hasty appointment a month ago. He was expected as a fireman as the previous budget, announced on September 23, had been a failure that plunged Britain into a financial crisis that saw his predecessor Kwasi Kwarteng, then newly appointed Prime Minister Liz Truss, quickly replaced by Rishi Sunak.
True to the image he has presented to the British people for more than ten years, the slender Chancellor of the Exchequer has taken the step in stride. His seriousness and return to an austere budget, in the purest Tory tradition, calmed the financial markets, which had caused the pound to collapse and interest rates to rise in the face of the unfunded plan by the Truss-Kwarteng team. . And he used his “Oxfordian” smile – the university where he studied – to, in the heat of the House of Commons, quell the attacks from the Labor Party, which came to beat his strict treatment.
The magic potion of the return to savings
Because as the centre-left emphasizes daily The Guardian , Doctor Hunt’s elixir is “nothing more than a real return to austerity”. Although most of the cuts are planned after the next general election in 2024, the new budget plans to bring an extra £55bn (€63bn) into public coffers, between tax rises and spending cuts. A twist justified by the deterioration of the budgetary outlook: while the country is heading into recession and showing inflation above 10%, the public deficit could rise by £108 billion.
In this explosive context, can the country’s great financier, presented by the media as the “saviour” at least of his party, the Tories, weighed down by his heartache and the mistakes of his leaders, succeed? “The economic indicators will tell,” replies François-Joseph Schichan, former chief political adviser at the French Embassy in London, now director of the company Flint Global. In any case, Jeremy Hunt is a professional who managed his previous ministries very well. He is a moderate, including on Brexit, which is reassuring.”
Opportunistic centrist
Close to former Prime Minister David Cameron, who also traveled through Oxford, Hunt, 56, is a veteran of the political game. Appointed Secretary of State for Culture, Media and then Sport, he oversaw the organization of the 2012 London Olympics. Between 2012 and 2018, as Health and Social Care Secretary, he carried out a controversial reform of junior doctors’ pay, earning him the title of ‘Britain’s most hated front-line politicians’, according to the daily The independent. He then headed British diplomacy for just over a year.
Described by his peers as “reasonable”, “lovable” or “boring”, this supporter of the center wing of the Conservative Party has also developed on Brexit. At first he supported the Remain (anti-Brexit) camp, then joined Leave after the referendum which allowed him to stay in government. Diplomat Peter Ricketts, a member of the House of Lords, emphasizes the “plasticity” of Hunt, who he nevertheless describes as a “responsible politician” with, like Rishi Sunak, a credibility that reassures. His next big meeting in Parliament will give him an opportunity to gauge his political acumen, with the passing of these tax increases, which will bring compulsory levy to an unprecedented level…already criticized by several elected Tories.
A bitter fiscal drink
If the word austerity has not been uttered, this budget bears the mark, with £55bn (€63bn) a year over five years to be found to fix the public accounts of a country heading into recession . The screw will first go through £25 billion of tax increases: taxes on electric cars, increased taxation of energy company super profits, income freezes and inheritance tax despite inflation… To spare the most modest, social benefits will be increased by 10% and the minimum wage by 9, 7%, to follow the price increase.
And the support plan for energy bills will be extended… but these should still rise by £500 (€576) from April to £3,000 a year on average. On the public spending side, up to £30 billion in savings have been planned, but from 2025. In the meantime, only the public hospital and schools will get an extension. With this two-stage timetable, the Prime Minister, Rishi Sunak, is delaying the difficult arbitration proceedings until after the 2024 election. This will not be enough to save him from a “winter of discontent”, whereas according to the Office for Budget Responsibility (UK’s Public Finance Council) , household incomes will fall by 7% over the next two years.
accounts to settle
7.1% public deficit in 2022 (in % of GDP).
89.9% public debt (as % of GDP).
£55bn a year to be found, including £25bn in tax rises and £30bn in savings.
(Source: Office for Budget Responsibility)
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