Autumn Statement 22: Hunt declares £55bn in tax rises and spending cuts as UK enters recession

The chancellor said he aimed to prioritise “stability, growth and public services” in the statement, following news that inflation hit 11.1% in the UK last month.

He warned that “high inflation is the enemy of stability”, stating that inflation was now predicted to average 9.1% this year and 7.1% in 2023.

He then confirmed the Office for Budget Responsibility had declared the UK is currently in recession, with GDP falling by 1.4% next year.

The chancellor then laid out his Autumn Statement, stating that a short term use of fiscal policy to support the economy was necessary, leading to recession being shallower and inflation reduced.

Hunt warned of a “substantial tax increase”, though he said that tax as a percentage of GDP would only increase by 1%. Therefore, the top tax threshold of 45% would be reduced from £150,000 to £125,140.

Various taxes would also see their tax free allowance threshold frozen rather than rising with inflation, such as inheritance tax and national insurance.

Meanwhile, the windfall tax on oil and gas companies will increase from next year from 25% to 35%.

The chancellor also reaffirmed the government’s commitment to the Glasgow agreement made at COP26 last year, targeting a 68% reduction in emissions by 2030.

However, he introduced measures to institute a 45% levy on electricity generators, while expanding road tax to electric vehicles from 2025.

Loosening fiscal rules, Hunt delayed the timeline on the proportion of debt to GDP falling from three years to five years, while no longer targeting current balance for public sector spending, instead stating that borrowing must be below 3% of GDP.

The new measures he introduced today will lead to debt to GDP falling from 97.6% to 97.3% between 2025 to 2028, according to the chancellor.

Hunt also reaffirmed the government’s commitment to Bank of England independence, arguing that it had done an “outstanding job” and the country needed “fiscal and monetary policy to work together”.

Turning to growth, Hunt highlighted three key areas to target: Energy, infrastructure and innovation.

To target these, he announced a nuclear power station at Sizewell C would be going ahead, while big infrastructure projects like Northern Rail and HS2 also continuing.

Meanwhile, he also announced planned changes to regulation in five growth industries of “digital, life sciences, green industries, financial services and advanced manufacturing”.

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