UK Faces £50B Fiscal Hole, Government Sources Say
On Monday, two UK government sources revealed that Chancellor of the Exchequer Jeremy Hunt seeks to fill a £50B ($57B) fiscal hole in the country's finances amid an upcoming November fiscal statement.
Facts
- On Monday, two UK government sources revealed that Chancellor of the Exchequer Jeremy Hunt seeks to fill a £50B ($57B) fiscal hole in the country's finances amid an upcoming November fiscal statement.
- Sources from the Treasury claim that Hunt's draft proposal contains around £35B in public spending cuts and £25B in tax rises. Meanwhile, Cabinet Office Minister Oliver Dowden has acknowledged that there would be "difficult decisions" on both tax and spending.
- Business Minister Grant Shapps has also commented that details will be revealed "very shortly" concerning reports that the Energy Profits Levy — known as the windfall tax — will be raised from 25% to 30%.
- There are also questions surrounding whether the government will continue with its "triple lock" pension promise — where state pensions annually must rise by the largest figure out of: inflation, average earning rises, or 2.5%.
- This comes as the Bank of England predicted last week that increasing interest rates would push the UK into the longest recession since the 1930s.
- The government's economic plan was delayed from Oct. 31 to Nov. 17, with Hunt announcing that it will now include a full fiscal statement — expanding its scope to include longer-term plans for the UK's economy.
Sources: Reuters, Get Surrey, Energy Voice, Newsbud, and Guardian.
Narratives
- Right narrative, as provided by The Spectator (UK). There's no such thing as free money, and the UK cannot borrow forever. The reality is that Hunt has been tasked with having to find tens of billions of pounds. While the likes of increasing the windfall tax may sweeten the upcoming statement for some, it's clear that there are no pain-free options on the table as the UK finds itself with no other choice but to enter austerity.
- Left narrative, as provided by Mirror. Cutting spending and raising taxes will only sharpen Britain's economic pain and benefit the rich the most. In what would be economic suicide, it's clear that the Tories intend to repeat the same pattern that occurred in 2010, where the wealthy survive and those on middle and lower incomes face the brunt of Conservative policies.
