News ID: 109132
Publish Date : 18 November 2022 - 22:25

From Bad to Worse: UK Unveils Brutal Squeeze

LONDON (Dispatches –
Beleaguered Britons have said how they have been left financially crippled and will be forced to skip meals after Finance Minister Jeremy Hunt unveiled a brutal squeeze on Thursday to stabilize the government’s finances with the tax burden soaring above £1 trillion this year.
Unleashing a wave of tax changes in an extraordinary Autumn Statement, the Chancellor warned the country must make “sacrifices” to weather turmoil at home and abroad while insisting the emergency response would be “compassionate”.
But Britons now face the highest tax burden since the Second World War, with all workers having to pay more in tax as a freeze on the personal allowance, basic and higher thresholds is extended to 2028.
The raft of changes have left the average family facing the prospect of being more than £800 a year worse off, while the Chancellor has also confirmed that help with soaring energy bills is due to be reigned in - with the typical household bill rising from £2,500 to £3,000 from April.
It has also left households facing the worst falls in living standards since records began in 1956, wiping out eight years of progress with unemployment surging from 1.2 million to 1.7 million.
Britons across the country - including apprentices, solicitors, shop owners and pensioners from Portsmouth, Aylesbury and Chelmsford to Bicester and London - who say they have already been skipping meals and living without the heating on, have told of how they now expect an even more daunting battle.
Millions of households now face higher tax bills after Hunt extended the freeze on income tax thresholds and allowances for two years. This means even middle earners now face paying the 40 percent rate of tax.
Currently, Britons pay 0% tax on earnings below £12,570, 20% on earnings up to £50,270, 40% on earnings up to £150,000 and 45% on earnings over £150,000.
Freezing the first three thresholds means that as your pay increases over the coming years, you will move into a higher tax band. Economists calculate that if you receive a £60,000 salary, over the next five years you could lose £14,990 in extra tax.
The Chancellor also used his autumn statement to announce help with energy costs has been extended for all households, but at a less generous level, meaning millions will still face higher bills.
The energy price guarantee will continue for a further 12 months from April, but will rise from the current £2,500 to £3,000 per year for the average household.
Retired Dolores Jones admitted that she was most concerned by rising electricity prices and now sleeps with a hot water bottle to avoid turning on the heating.
She said: “We’ve been putting hot water bottles in our beds. Our energy bills have gone up at least 40-50 percent.”
It comes after Hunt also sought to show that the wealthy are being clobbered too, cutting the level at which the 45 percent top rate is due from £150,000 to £125,000 to catch another 250,000 people.
Hunt admitted that “living standards are going down”.
“That is the uncomfortable situation facing us and countries like Germany, who are seeing their growth forecasts go down by even more than us,” the Chancellor told broadcasters.
The tax burden will go from 33.1 percent of GDP in 2019-20 to 37.1 percent in 2027-28 - a percentage point higher than forecast in March and its highest sustained level since the Second World War.
Shadow chancellor Rachel Reeves said Hunt had “picked the pockets” of the entire country by deploying a “raft of stealth taxes”.
Tories are already voicing fury at the scale of the measures, with Conservative veteran Richard Drax warning that raising taxes on businesses and hard-working people risks “stifling” growth and productivity.
Former Cabinet minister Esther McVey has threatened to rebel and others raised alarm that Hunt is “throwing the baby out with the bathwater”.
The stark backdrop to the Autumn Statement was new forecasts from the Office for Budget Responsibility (OBR) watchdog, showing that the UK is already in recession.
It also made fresh predictions for inflation, which it was revealed has jumped to a 41-year high of 11.1 percent.
Hunt told MPs that ministers have to take “difficult decisions” now in order to tame inflation, which he described as “the enemy of stability”.
He warned that the UK faces “a global energy crisis, a global inflation crisis and a global economic crisis”.
Speaking to broadcasters after his Commons statement, the
Chancellor insisted Britons were not alone in suffering a fall in living standards.
“Living standards are going down,’ he said. “That is the uncomfortable situation facing us and countries like Germany, who are seeing their growth forecasts go down by even more than us.”
Britons are facing the biggest fall in living standards since the 1950s as the economy enters a year-long recession, official forecasters said.
The Office for Budget Responsibility estimated the cost-of-living crisis would reduce living standards - the real purchasing power of households’ incomes - by a staggering seven percent over two years.
It is forecast this will be followed by the second largest fall on record, of 2.8 percent, in 2023-24.
This means families are set to suffer declining living standards for two consecutive years for the first time since the aftermath of the 2008 global financial crisis.