Britain's budget: What you need to know

Chancellor Jeremy Hunt must show investors that Britain's 2.45 trillion-pound ($2.91 trillion) debt mountain will start to fall as a share of GDP.

By Reuters

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Jeremy Hunt has warned of 'tough but necessary' measures in the budget on top of the reversal of most of the unfunded tax cuts promised by former Prime Minister Liz Truss.
Jeremy Hunt has warned of "tough but necessary" measures in the budget on top of the reversal of most of the unfunded tax cuts promised by former Prime Minister Liz Truss.

Published: Thu 17 Nov 2022, 3:08 PM

Finance minister Jeremy Hunt will bury Britain's failed "Trussonomics" experiment later on Thursday by cutting spending and raising taxes, moves that he and Prime Minister Rishi Sunak say are needed to restore investor confidence.

Following is a snapshot of latest developments.


* Hunt will speak at around 1130 GMT. He has warned of "tough but necessary" measures in the budget on top of the reversal of most of the unfunded tax cuts promised by former Prime Minister Liz Truss and which rapidly brought her down.

* Britain's economy is still below its pre-COVID size and is probably already in recession, with 11% inflation creating a cost-of-living crisis.


* Hunt will outline tax hikes and spending cuts aimed at saving more than 50 billion pounds a year - equivalent to about 2% of annual economic output - by five years' time. How soon they come will be key for the short-term economic outlook.

* Hunt says that to slow a rise in borrowing costs, he must show investors that Britain's 2.45 trillion-pound ($2.91 trillion) debt mountain will start to fall as a share of GDP.

* "We need fiscal and monetary policy to work together" to beat inflation, Hunt will say.

* The independent Office for Budget Responsibility (OBR) will report on the state of public finances after Hunt speaks.

What might hunt announce?

Newspaper reports have suggested Hunt is considering measures including:

* Inflation-linked rises in welfare and pensions payments, after worries about a smaller increase.

* Help for the poorest households to pay their energy bills when an existing cap expires and is replaced with a less-generous one in April.

* Extending a freeze on the thresholds for starting to pay income tax, dragging more people into the net.

* Reducing the threshold for paying the higher rate of income tax by 16% to 125,000 pounds a year.

* Measures to boost revenue from dividend and capital gains taxes.

* Increasing a windfall tax on oil and gas firms and extending it to power generators.

* Allowing insurance firms to invest billions of pounds in green energy and other infrastructure projects.

* Hunt has said he will address a shortage of workers which is dragging on growth and fuelling inflation.

Markets

* Sterling, which hit a record low $1.0327 after Truss's Sept. 23 mini-budget, was trading at about $1.19 and 87.02 pence per euro on Thursday.

* Benchmark 10-year gilt yields were around 3.2%, their lowest since mid-September.

* UK shares slipped close to one-week lows. (Compiled by Catherine Evans; Editing by Toby Chopra)



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