Relief meets fear as UK budget calms economy but brings pain
Britain’s Conservative government is defending its decision to hike taxes for millions of working people in the “squeezed middle” class as it tries to shore up an economy battered by double-digit inflation
LONDON (AP) — Britain’s Conservative government on Friday defended its decision to hike taxes for millions of working people in the “squeezed middle” class as it tries to shore up an economy battered by double-digit inflation and the reckless tax-cutting of recently ousted Prime Minister Liz Truss.
An emergency budget announced by Treasury chief Jeremy Hunt on Thursday includes 25 billion pounds ($30 billion) in tax hikes, including higher income tax for middle and top earners and steeper local household taxes. The Treasury acknowledged that the moves will take taxes as a share of national income to its highest level since World War II.
The combination of high inflation – predicted to be 9.1% for 2022, largely driven by soaring energy costs from Russia’s invasion of Ukraine – and stagnating salaries means a 7% decline in U.K. living standards over the next two years, according to the Office for Budget Responsibility, the government’s fiscal watchdog.
“The truth is, we just got a lot poorer,” Paul Johnson, director of the Institute for Fiscal Studies think tank, said.
