Britain is moving closer to Europe: not in the sense that they are having second thoughts about Brexit, but because the Budget, the budget law presented on Wednesday by the Labor government, makes the fiscal pressure skyrocket towards continental levels. The Chancellor of the Exchequer, i.e. the Treasury Minister, Rachel Reeves, the first woman in history to hold this position, has announced a sting of over 40 billion pounds (around 50 billion euros): the result will be to raise the tax burden at 38% of GDP, a level never seen since the post-war period.
We are still far from the European records (48% in France or 42% in Italy), but in London ten years ago they were stuck at 32%. The problem is that for a long time the British had deluded themselves into thinking they could have American levels of taxation (low) and European quality of public services (high): the result is failing finances and disastrous public services.. The Labor turning point is a paradigm shift: something other than the Singapore-on-the-Thames dreamed of by Brexit supporters, i.e. a deregulated tax haven: on the horizon there is rather London-on-the-Mediterranean.
The objective of the measure, they say in Downing Street, is to “restore economic stability” to guarantee “strong public services in the long term”: therefore large injections of money primarily into healthcare and schools. It is the return of the State: public spending will cover 44% of the economy, because Labor is banking on state intervention to restart growth. AND It will have to be the richest businesses and taxpayers who make the effort: the Labor one is a “left-wing” maneuver, which shifts the tax burden onto entrepreneurs and capital income. However, not everyone is convinced: the guardians of public finances fear a slowing effect on the economy and there are those who denounce the suffocation of entrepreneurial dynamism. But in Keir Starmer’s London, Anglo-Saxon liberalism now appears to be in retreat.
