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Britain announces its cost-of-living budget as strikes rage

LONDON — The UK government on Wednesday pledged £94 billion ($114 billion) in cost-of-living support for this year and next as it forecast Britain will stay out of a recession and the inflation will slow down sharply.

Treasury Secretary Jeremy Hunt unveiled an annual budget set amid mass strikes and said it was “protecting troubled families” as he outlined more support, particularly for energy bills and childcare.

Coinciding with the budget, teachers, trainee doctors, civil servants, BBC journalists and London Underground drivers staged the latest strikes, demanding higher wages in line with soaring prices.

“High inflation is the root cause of the strikes we have seen in recent months,” Chancellor Hunt told parliament.

“We will continue to work hard to resolve these disputes, but only in a way that does not fuel inflation,” he added.

– No recession –

UK inflation remains above 10 percent but should cool to 2.9 percent by year-end, Hunt said.

“Britain will not… go into a technical recession this year,” he added, after the economy narrowly avoided two consecutive quarters of contraction in 2022.

The government announced it would extend a subsidy on energy bills for another three months after Russia’s invasion of Ukraine boosted it.

Prime Minister Rishi Sunak’s conservative government also announced an increase in funding for childcare and other measures aimed at getting parents, the over-50s and others back into the labor market.

Hunt unveiled a major expansion of the government’s free childcare scheme to tackle some of the highest childcare costs in Europe and to encourage parents to return to work.

It aims to fill 1.1 million jobs – caused in part by a post-Brexit EU labor shortage and a record number of people classified as long-term ill since the Covid pandemic.

The Chancellor also confirmed that workers could invest more tax-free money in private pensions to discourage early retirement.

However, opposition Labor leader Keir Starmer has argued that this is a “permanent tax cut… for the wealthiest 1 percent” as many do not have enough income to benefit.

Amid geopolitical tensions surrounding Ukraine, Hunt confirmed that UK defense spending would increase by £11 billion over the next five years.

He also outlined a 20-year plan to capture carbon and commit to nuclear power as the government looks to strengthen energy supplies and establish a “net-zero” economy by 2050.

– ‘No rabbit, no hat’ –

But the chancellor kept spending on a leash after debt skyrocketed as a result of the pandemic.

Hunt only took office in October — reversing unfunded tax cuts imposed by Sunak’s short-lived predecessor, Liz Truss, whose free-market policies were panicking markets.

“It is customary for the Chancellor to ‘pull a rabbit out of a hat’ during budget planning,” observed Stuart Fox, a policy lecturer at the University of Exeter.

“As for Jeremy Hunt, however, there isn’t enough money to buy the rabbit — or the hat — because of rising inflation, sluggish growth, and the disastrous impact of Liz Truss’ tenure on public finances.”

Paul Johnson, director of the Institute for Fiscal Studies (IFS) think tank, added that Sunak had made a “political decision” on public sector pay.

“No means could be found to improve the wage offer for striking public sector workers where £6 billion might have been enough to allow for an inflationary wage offer,” commented Johnson.

“It’s a political decision. Money for motorists,” he said, referring to Hunt’s announcement of a fuel tax freeze, “but not for nurses, doctors and teachers.”

Source: Crypto News Deutsch

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