London unveils plan for growth in crisis-ridden UK

British Chancellor of the Exchequer Jeremy Hunt in London on November 17, 2022 (JUSTIN TALLIS / AFP/File)

Britain’s Chancellor of the Exchequer on Friday unveiled a growth plan for the UK economy that prioritized tackling inflation, despite calls for tax cuts that were unanimously welcomed by the business world.

Criticizing the “decline” in the UK that is on the brink of recession, Jeremy Hunt has unveiled a long-term strategy focused on green energy, biotech, infrastructure, digital or creative industries.

Brushing aside calls for tax cuts from his own conservative camp, the Chancellor of the Exchequer said that in the context of rising prices and a cost-of-living crisis, “the best tax cut was to lower inflation”.

In Great Britain, inflation reached 10.5% in December.

In September and October, the short-lived Liz Truss government released a budget with massive tax cuts and massive energy bailouts that rattled markets, sent interest rates soaring and forced the Bank of England to intervene.

Mr Hunt said the country was already in recession when he presented his latest budget in mid-November, based on forecasts from the government body OBR.

Inflation by spending sector in the UK
UK inflation by spending sector (Nalini LEPETIT-CHELLA / AFP)

UK Gross Domestic Product (GDP) was slightly better than expected in November, showing a slight increase for the second month in a row, but it fell by 0.3% in the three months to the end of November compared to the previous month, according to official statistics. three.

In November, the OECD predicted that the UK would have the worst performance of the G7 rich nations over the next two years.

Lack of details

Mr Hunt admitted on Friday that the UK had “not returned to pre-pandemic levels of employment or output”. “We must make Brexit a catalyst for bold choices,” he said.

Cost of living in the UK
Cost of living in the UK (Jonathan WALTER / AFP)

The government is hoping to reform the Solvency II European directive, which regulates insurance and is due to come into effect within months, “to attract £100bn of additional investment for the most productive British assets of this decade. clean energy or infrastructure”.

At a short press conference, when asked about the negative impact of Brexit on the availability of workers or the increase in red tape, Mr. Hunt replied that Britain’s exit from the EU “is a big change in our economic relations with our neighbors (…) and, of course, there are short-term interruptions.”

Finally, the chancellor called on people who left the labor market during the pandemic to return to work, to address a huge labor shortage caused partly by the administrative complications of Brexit but also by long-term illness.

Susannah Streeter, an analyst at Hargreaves Lansdown, said there was “not a lot of detail” on how the government intended to implement the plan. The minister hinted that he saved his announcements for the March budget.

This speech comes after a series of criticisms from the business community.

For example, billionaire James Dyson, the founder of the group of the same name, called the economic strategy “stupid” and “myopic”.

Tony Danker, head of employers' organization CBI, in Birmingham on 21 November 2022
Tony Danker, head of employers’ organization CBI, in Birmingham on November 21, 2022 (Oli SCARFF/AFP/Archives)

CBI chief Tony Danker ruled on Monday that the country was lagging behind in green growth, lamenting barriers to the movement of skilled European workers and the abandonment of many rules inherited from the EU this year.

Reacting to Friday’s speech, the chancellor said he had “laid a solid framework for growth. We hope that in less than two months’ time the budget will include strong new measures to take us forward”.

“Over the past 20 years, the UK has gone from an advanced economy to an almost average economy in terms of growth potential due to the ‘financial crisis, a decade of fiscal consolidation and Brexit’.” Berenberg bank.

“But half of this autumn is about Brexit” and “Hunt, who is involved in the politics of his party, cannot promise the main things that companies want to hear to increase investment: that he will end Brexit uncertainty (… ) and restore relations with the EU, Britain’s main market” .

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