Bet on Britain’s National Fortune? Truss Government Launches Massive Tax Cut Plan – Xinhua English.news.cn

Bet on British national fortune? Truss government launches massive tax cut plan, hopes to survive five crises

[Corrispondente speciale del Global Times Ji Shuangcheng Reporter del Global Times Yang Shasha]On the 23rd the British government Truss announced a series of economic stimulus measures, including large-scale tax cuts, in hopes of reviving the British economy which is about to fall into recession. The Institute for Fiscal Studies think tank thinks it will be the largest tax cut since 1972. However, the investment market did not feel relieved about it, but feared that the UK government’s high debt situation would lead to greater social unrest. The British opposition Labor Party called it a “hopeless bet”. A number of Brits interviewed by a Global Times reporter said that the British economic recession has begun and their lives have become more embarrassing under the high inflation and life is even more difficult than the 2008 financial crisis.

“British disease”

British Chancellor of the Exchequer Kwarten announced on the 23rd that the tax cuts introduced this time relate to personal income tax and property tax. The UK government estimates that the tax cuts will translate into reduced tax revenues, with an estimated £ 45 billion in tax collections to be lost by fiscal year 2026-27. The UK’s Financial Times quoted Kwarten as saying that the purpose of this tax cut plan is to boost the UK’s economic growth rate to 2.5%, otherwise it will be difficult for the government to pay for public services. The day before, the Bank of England announced an interest rate hike of 50 basis points, bringing the benchmark interest rate to 2.25% in response to rising inflation expectations.

Paul Johnson, director of the Institute for Fiscal Studies, a British think tank, said the UK could borrow £ 120 billion over three years to achieve these measures. Paul Johnson described the plan as a “big bet” in which the money was poured into an economy with still high inflation. The situation will only be “controllable” if UK economic growth “really keeps pace”. The Japan Times even called it Truss’s “historic gamble” on the British economy.

The concerns in the investment market are almost one-sided. According to Bloomberg, on the 23rd, the exchange rate of the pound against the US dollar dropped to 1 pound to USD 1.0894, falling below the USD 1.09 threshold for the first time since 1985.

At least five crises, including Brexit, the Russian-Ukrainian conflict, the death of the queen, high inflation and skyrocketing energy prices, have led to a recession in the British economy. Ding Chun, a professor at the Institute of World Economics at Fudan University’s School of Economics, said in an interview with a Global Times reporter on the 25th that the death of the Queen of England, combined with the economic downturn in the UK, it has affected the confidence of the British to some extent. However, the main cause of the British economic recession is mainly linked to the long “Brexit”. Due to the long run of Brexit, the UK and the European Union are still in the process of joining and connecting.Moreover, the world economy in general is facing the impact of stagflation and the UK is embroiled in the conflict between Russia. and Ukraine, resulting in a labor shortage in the UK market, severe energy crisis and other problems. Ding Chun believes that with the highest inflation of the past 40 years and the pound exchange rate dropping to a 37-year low, the economic dilemma facing the UK right now is very similar to the situation in which Margaret Thatcher came to power. , the UK has also faced “British diseases” such as stagflation.

Regarding the “prescription” launched by the UK government such as large-scale tax cuts, Ding Chun believes it is not easy for the “prescription” to achieve the purpose of curing diseases and saving people, and must see if support measures are available. “The tax cut means that the country’s income will be reduced. In this case, how to solve ordinary people’s accounts and bridge the gap in the economy requires cheaper measures,” Ding Chun thinks, if ordinary people can survive until The UK government closes the economic hole Most importantly, strikes and other activities will break out in the UK during this period.

The lights in many British homes went out early

The Resolution Foundation, a British think tank, warned in a report earlier that the UK is facing the worst standard of living crisis in 100 years.

In Hastings, a coastal town in south-east England, the local seafood restaurants selling hawk along the urban coast have now all but disappeared. Before the epidemic, even though the growth of the local consumer economy was slow, you could still see a large plate of affordable fish for £ 25. Philip, a local who switched to a fish and chips business with an asking price of £ 8 each, told the Global Times reporter that closing a seafood restaurant he has run for most of his life is truly helpless. , under the attack of the epidemic and high inflation. , the original £ 25 fish meal, after deducting the cost and shipping, will be close to £ 10. He said that surrounding counterparts have also closed their stores one after the other since the second half of last year. This round of British economic downturn lasted nearly two years and there was no turnaround.

In autumn, if you pay a little attention, you’ll find that many people’s lights in the UK go out early. To save electricity and gas, many Brits also flocked to free local libraries and vied for a corner to work. The Johnson government has repeatedly urged employees to return to work in urban businesses during the outbreak, but failed, but now more and more employees are voluntarily returning to work, preferring to be late and leave late. is to reduce household energy costs.

Nasim, who works as a barber in London, originally planned to buy his barber shop at the local bargain price as soon as the outbreak was over, so he prepared a down payment budget of £ 30,000. But now, he has given up on this dream. He told the Global Times reporter that, on the one hand, high inflation has led to the need to double investment costs and, on the other hand, in the small town where he lives, fewer and fewer people are willing to spend £ 15 for a haircut. “There are already five hairdressers in town and business is very bleak,” sighed Nassim, saying he still has to do 30 haircuts a day for 30 clients to secure rent, family meals and car expenses.

Expert: Britain will be more pragmatic in trading with China

Due to the doubts and criticisms of the outside world, in an interview with the British “Daily Telegraph”, Kwoten denied taking the British economy as a gamble. He said he couldn’t comment on the volatility in the financial markets, but he believed that the best thing for the economy would be to create an environment where people could come and invest in the UK.

Thomas, who is engaged in the import and export of medical equipment in Manchester, the largest city in the North West of England, told the Global Times reporter that business cooperation with Chinese companies has become less profitable in the UK. last years. On the one hand, the supply chain is not regular, resulting in high operating costs; on the other hand, many of their investors are not optimistic about the relationship between the UK and China, particularly the hawkish attitude of the Truss government towards China has exacerbated their concerns.

Currently, China is the third largest foreign trade country and the UK’s largest importer, and the development of trade between China and the UK has maintained good momentum for a long time. Ding Chun believes that the British diplomatic tradition is very pragmatic, as evidenced by the fact that the UK has resisted pressure from the US to join the AIIB, and the UK will now be more pragmatic to have a good relationship with China. British Deputy Prime Minister Coffey, on behalf of the British government, thanked Wang Qishan for his special trip to attend the queen’s funeral, saying that the new British government is working on various tasks and hopes to further strengthen cooperation with China. in the fields of economics, trade, environmental protection, climate change and multilateral affairs.

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(Responsible director: He Xin)

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