Now it’s “official”: Brexit will impoverish Britain’s Khashoggi case: US government says Saudi prince likely to be immune from prosecution

It was not a bitter pill that Chancellor of the Exchequer Jeremy Hunt administered to the British public on Thursday. It was a load of drugs, yes, a downright drastic remedy, which the Minister of Finance prescribed in his ‘autumn announcement’ in the House of Representatives. For Hunt, it’s about nothing less than saving the British economy.

The situation is grim. Britain is already in recession, the Tory politician said. Experts expect the economy to shrink by 1.4 percent in 2023. Inflation was recently 11.1 percent, the highest in 41 years. In many sectors, workers are striking for higher wages. That also weighs on the economy.

The state budget is also out of control. With tax increases and spending cuts totaling £55bn, Hunt aims to balance the budget, calm markets and bring inflation under control. For example, tax credits will be frozen until 2028, leaving millions of Britons with higher bills.

Confidence has been shaken

In the end, Jeremy Hunt has to pay for what the government of short-lived Prime Minister Liz Truss had done. The ‘mini-budget’ of their even shorter-term finance minister, Kwasi Kwarteng, caused panic in the financial markets with its ‘toxic’ mix of tax cuts, huge new loans and high inflation.

The pound rattled into the basement. The Bank of England had to raise interest rates and buy government bonds to save pension funds from collapse. Trust has also been damaged after the departure of Truss and Kwarteng. The new Prime Minister Rishi Sunak admitted that it is mainly a matter of meeting the expectations of the markets.

Difficult times for the population

However, the question is whether Jeremy Hunt will succeed in his plan. Many conservatives are extremely critical of the tax increases, which include an excess tax on energy companies. At the same time, the toughest austerity measures should not come into effect until 2025, i.e. after the next elections. Critics say it is a trap for the Labor opposition.

It is well ahead of the Tories in the polls. This is not likely to change any time soon as difficult times are ahead for the population. According to official estimates, household income is likely to fall by seven percent over the next 18 months. Hunt spoke to the BBC about “real challenges facing families across the country”.

“We have become much poorer”

Tax increases and inflation contribute to this. The government also wants to raise the proposed “ceiling” on average household energy bills from £2,500 to £3,000 a year. And higher interest rates mean higher mortgage rates for many homeowners. The population of the kingdom is threatened with a considerable loss of prosperity.

“The truth is we just got a lot poorer,” Paul Johnson, director of the Institute for Fiscal Studies (IFS) think tank, said of Chancellor Jeremy Hunt’s plans: “We are on a long, arduous and unpleasant journey. ” A series of “economic goals of their own” made them even harder than they needed to be.

decline in productivity

Overall, the UK economy is not doing well. Experts expect unemployment to rise from 3.6 to 4.9 percent in 2024. Prime Minister Sunak cites the war in Ukraine and the corona pandemic as the main reasons for the unfortunate situation. Andrew Bailey, head of the Bank of England, disagrees.

Speaking to the House of Commons finance committee on Wednesday, he pointed out that the UK economy is recovering from Covid much more slowly than those in the eurozone and the US. For Bailey, Brexit, Britain’s departure from the European Union, is a key factor. It has led to a “sustained decline” in productivity.

Permanent damage from Brexit

Swati Dhingra, a member of the central bank’s monetary policy committee, added: “There is no denying that trade in the UK has weakened much more compared to the rest of the world.” And even before the sharp rise in inflation this year, prices had risen and wages had fallen as a result of Brexit.

Food prices have risen by six percent as a result of the newly erected trade barriers for the continent, she stressed: “We are definitely weaker than our competitors,” says Dhingara. Michael Saunders, a former member of the Monetary Policy Committee, was even more drastic.

“The UK economy as a whole has been permanently damaged by Brexit,” he told Bloomberg TV on Monday. He significantly reduced economic potential and allowed investments to erode. “If we hadn’t had Brexit, we probably wouldn’t have been talking about an austerity budget this week,” Saunders concluded.

This confirms what Brexit opponents had been warning about. It can only go wrong if you leave a common market of 500 million people without equivalent alternatives. The British seem to realize that. In the latest polls, about 60 percent are in favor of returning to the EU.