The Office of Budget Responsibility (OBR) and the Chancellor have been in cahoots together to prove to the markets how tough Britain’s next wave of austerity will be, writes David Little, a partner in our Corporate and Commercial Law team.
In real-term costs, UK households’ disposable incomes will fall by 7.1% over the next two years – the lowest levels since records began in 1956/7, taking incomes down to 2013 levels, according to the independent Office for Budget Responsibility.
On balance, given the commitment the UK is still making to support Ukraine, and the ‘eye watering’ debt incurred keeping the economy turning during 18 months of Covid lockdown, going back to 2013 feels about right.
It is essential that underlying debt should now fall as a percentage of GDP, and that public sector borrowing should come down. What I found intriguing is how little wriggle room the Chancellor has given the opposition to change tack, should they win the next general election in 2024/25.
He said he had “tried to be fair” in his decisions by asking those “with more to contribute more” and avoided tax rises that “most damage growth”.
Mr Hunt promised to “protect the vulnerable” and said his plan to plug what he previously called a fiscal “black hole” will lead to “a shallower downturn and lower energy bills”.
Whilst all the commentary about the budget has been fairly widespread it’s the stealth taxes – which haven’t yet made the headlines – which I suspect will reveal themselves in the next few days and weeks.
In the meantime, all that business owners can do is do what we’ve always done, and follow Winston Churchill’s dictum: “If you find yourself in Hell, keep going.”
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David Little is a Partner at Bishop & Sewell in our expert Corporate & Commercial team. If you would like to contact him, please quote Ref CB362 on either 020 7631 4141 or email email@example.com.
The above is accurate as at 04 November 2022. The information above may be subject to change during these ever-changing times.
The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.