British Prime Minister Rishi Sunak said on Friday that the government “cannot do everything” because heavy borrowing by the government will ultimately lead to skyrocketing inflation and higher interest rates.
This comes after the Bank of England raised its base rate to 3% and predicted a two-year recession.
in an interview with The Times of LondonSunak said it would “absolutely do everything” to limit the rise in mortgage rates, adding, “I think inflation is our biggest enemy.”
According to The Times, the prime minister will rule out a “return to austerity” or comment on details of fiscal policy ahead of the prime minister’s fall budget announcement scheduled for Nov. 17. He refused, saying “difficult decisions will be made”. You will be able to “judge” that it is a “fair approach”.
Sunak also said he was “sure” that people would find it to be a “caring approach”.
But the prime minister said it was “correct” to be honest about the trade-offs, adding: “Everyone understands that the government cannot do everything.”
“how [the] Will the government do everything? Just doing it by borrowing money will eventually lead to high inflation, loss of credibility and soaring interest rates. In fact, the debate, in a sense, took place over the summer,” he said, coming after his predecessor Liz Truss’s “mini-budgets” aimed at cutting taxes, increasing spending and pursuing economic growth. hinted at market turmoil.
He said the market reaction following the Truss mini-budget showed “the dangers of the traditional workers’ approach to an economy that is far more comfortable about borrowing”, but that “Trassonomics” is all about it. refused to take responsibility for It is important to remember that there are global challenges caused by the COVID-19 pandemic and the Russian invasion of Ukraine.
During the Sunak and Truss party leadership election campaigns in July and August, Sunak called Truss’s economic plan to cut taxes immediately a “fairy tale”, but Truss criticized the former prime minister’s tax hikes, stifling economic growth. said it would lead to a reduction in revenue.
Debts, deficits, taxes, and interest
according to official figuresSuccessive British governments spent more money than they received in most years since the 1900s. The deficit (annual borrowing) as a percentage of GDP peaked during the 2008 economic crisis, then declined, but spiked again during the COVID-19 pandemic. After declining for decades after World War II, net debt as a percentage of GDP (cumulative borrowing) has also been trending upwards since 2008. 5th highest among OCED countries 2021 years.
Snack has provided an estimated £147 billion in business support packages during the COVID-19 lockdown, but the former prime minister has sought to distance himself from the Boris Johnson government’s decision to impose restrictions, saying: We weren’t allowed to talk about it.” “Trade-offs” in the early stages of a pandemic.
In 2020, the UK tax burden was 32.77% of GDP. Slightly below the OECD average.
In the 2021-2022 financial year, the Treasury has collected over £915 in taxes. This corresponds to about 39% of GDP.
The Bank of England raised its base rate to 3%, the highest in 14 years, on Thursday. Historical Figures of the Last 50 Years.