by Elizabeth Piper and David Milliken
LONDON (Reuters) – Britain’s finance minister, facing a budget hole of around £50 billion (about 57 billion euros), is expected to propose cutting government spending by £30 billion and raise taxes for an amount of about 20 billion pounds, we learned Monday from two government sources.
The Guardian reported on Sunday that draft versions of Jeremy Hunt’s budget plan envisaged up to £35bn in public spending cuts and around £25bn in tax hikes, while the Financial Times on Monday reported amounts 33 billion and 21 billion respectively for these two items.
No comment could be obtained from the Ministry of Finance but two government sources questioned about this press information indicated that these estimates more or less corresponded to the range envisaged but that the final amounts were still subject to change. .
Despite reversing most of the unfunded tax cuts promised by the previous government, Britain must fill what a UK Treasury source described last week as a ‘fiscal black hole’ impossible to make up for only by cuts in public spending, widened by the accumulation of heavy expenditure incurred during the COVID-19 pandemic and then by aid in the face of soaring energy prices.
The fiscal tightening envisaged by the UK government aims to reduce UK public debt over the medium term while rebuilding the country’s fiscal buffers.
The Chancellor of the Exchequer, who is due to present a budget communication to Parliament on November 17, will aim to reassure the financial markets after the weeks of financial and political turbulence triggered by the “mini-budget” presented at the end of September by his predecessor Kwasi Kwarteng, which resulted in the resignation of Liz Truss at the end of October.
(Report Elizabeth Piper and David Milliken, French version Myriam Rivet, edited by)
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