Tuesday, February 27, 2024
HometreasuryChancellor's Autumn Statement aims to shape outcome of next UK general election

Chancellor’s Autumn Statement aims to shape outcome of next UK general election

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Chancellor of the Exchequer Jeremy Hunt has announced a series of measures in his Autumn Statement, with experts claiming that he is attempting to shape the outcome of the next general election. The statement, which outlines the government’s spending plans and departmental budgets, is seen as the first step towards the election, due to take place next year. In an interview with Xinhua, John Bryson, professor of enterprise and economic geography at Birmingham Business School, stated that the measures announced by Hunt would have been implemented years ago if they were truly important for economic growth. Bryson argued that the UK business sector needs certainty in order to support economic growth, but the country’s political system is built upon uncertainty.

One of the main measures announced by Hunt was the “Full Expensing: Invest for Less” permanent tax cut, which allows businesses to offset their investment in information technology, plants, and machinery against tax. This measure is expected to cost £11bn per year and is being hailed as the largest business tax cut in modern British history. However, Bryson points out that the tax breaks do not include investments in training skilled labor and apprenticeships, which he believes are the primary assets held by companies.

Hunt also announced a cut to the main rate of National Insurance from 12% to 10% starting in January 2024. Bryson argues that this move is merely parking the issue of altering general tax thresholds and does not address the real problem in the UK. He suggests that tax thresholds should be tied to the inflation rate to prevent more people from falling into higher tax bands as their wages rise against the backdrop of high inflation.

The Office for Budget Responsibility (OBR) has estimated that the freezes on income tax thresholds will create 3.2 million more taxpayers by 2028, with 2.1 million more people paying higher rates of tax. This has raised concerns that more people will be burdened with higher taxes as their wages increase.

Overall, while the Chancellor’s Autumn Statement aims to provide tax relief for businesses and workers in order to give the British economy a pre-election boost, experts argue that the measures do not address the wider framework conditions necessary for sustained economic growth. Critics argue that the focus should be on investing in the workforce and ensuring that companies have access to skilled labor, rather than solely providing tax breaks for capital investment. The general public will be closely watching how these measures play out in the lead up to the general election next year.

More detail via The Star here… ( Image via The Star )

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