The British are eagerly awaiting how their new prime minister will get the financial crisis under control. His predecessor brought down the issue within days. Unlike the hapless Truss, Sunak and his finance minister take two weeks to do this. But the first details are already trickling through.
According to media reports, the new British Prime Minister Rishi Sunak is planning savings and tax increases of 50 billion pounds, the equivalent of 57.8 billion euros, to compensate for the huge deficit in the budget. The Prime Minister and his Finance Minister Jeremy Hunt would aim for a plus of £10 billion amid rising recession fears, the Times reported. The budget gap is therefore 40 billion pounds.
"Markets have calmed down somewhat but the picture remains bleak," the PA news agency quoted a Treasury Department source as saying. "After hundreds of billions of pounds have been borrowed and spent because of Covid-19 and support for energy bills, a massive financial black hole needs to be filled." Sunak's predecessor, Liz Truss, had announced tens of billions of pounds in tax cuts to encourage investment. But because the measures were only to be financed with debt, the financial markets were thrown into turmoil. Truss had to resign. The new Treasury Secretary, Hunt, was the first to withdraw almost all of the announcements. Even more tax increases are possible. Tough decisions would have to be made, the Treasury said. The tax burden is already higher than it has been for 70 years.
Hunt plans to present his medium-term financial plan on November 17th. Allegedly, both the planned increase in the defense budget by 3 percent by 2030 and the usual requirement to increase pensions in line with inflation are up for discussion. On the same day, the Office for Budget Responsibility will publish its economic forecast. It is expected to warn of a recession in the coming year.
The finance minister, who was appointed by Truss shortly before her resignation, had previously postponed his presentation of the budget by two weeks. Hunt said a short delay was warranted under the circumstances. Under the new prime minister, there is a prospect of long-term stability in the British economy. "In this context, a short delay of two and a half weeks is the best way to ensure that we make the right decisions," said the finance minister.
