British Prime Minister Sunak’s government presents budget plans

New British Prime Minister Rishi Sunak’s government will announce its budget plans on Thursday. In addition, there will be significant spending cuts and tax increases, despite the economic crisis and high inflation in the UK. Sunak has been prime minister for three weeks and succeeds Liz Truss, who resigned due to the uproar over her controversial Tory tax plans.

The budget is presented to Parliament by Chancellor of the Exchequer Jeremy Hunt. It also brings new forecasts for the economy and inflation. On Wednesday, he announced that UK inflation rose to more than 11 percent in October, the highest level in more than 40 years. The British economy contracted in the third quarter and the Bank of England (BoE) expects a contraction in the fourth quarter as well. This would put the UK into recession.

Hunt may announce £60 billion, the equivalent of €67 billion, in increases and tax cuts. He had previously reversed nearly all of Truss’ planned tax cuts. Hunt said tackling high inflation was his top priority and that government debt needed to be reduced. Sunak also mentioned that economic problems are his government’s top priority.

The British Central Bank is busy raising interest rates sharply in order to combat high inflation. The Bank fears that the UK could slide into a prolonged recession due to the crisis surrounding the soaring cost of living and skyrocketing energy prices.

Truss was prime minister for only a month and a half and resigned in October after major turmoil in financial markets over her controversial budget plans. She wanted to borrow a lot of money for those plans, which threatened to widen the budget deficit even more. The Bank of England even had to intervene in the financial markets as the British pound fell and British government bond yields rose. Truss was sacked by her finance minister, Kwasi Quarting.