Chancellor of the Exchequer Jeremy Hunt of the United Kingdom (UK), who announced 110 measures in his Autumn Statement, was attempting to shape the outcome of the next general election, which is due next year, a British expert said.
John Bryson, professor of enterprise and economic geography at Birmingham Business School, told Xinhua in an interview that the Autumn Statement, which sets out the government’s spending plans and departmental budgets, is the first of many steps toward the next election.
Hunt on Wednesday announced a package of tax reliefs for businesses and workers, trying to give the British economy a pre-election boost, including easing the tax burden on companies to promote investment, cutting the rate of national insurance tax on workers and protecting pensions for the retired.
But the professor said: “No government has any real significant impact on the short-term performance of the UK economy. A lot of the drivers sit beyond government and are outside its control.”
The measures announced by the chancellor would have been carried out years ago if they were truly important for unlocking or releasing economic growth, Bryson said.
The expert said what the UK businesses need to support economic growth is certainty, a certain wider framework environment that supports their activity, but the country has a political system in which uncertainty is built into the process.
“Every time you have a budget statement, an Autumn Statement, a Spring Statement, it raises uncertainty because it changes some of the wider framework conditions that underpin business activity,” he said.
In Wednesday’s statement, the chancellor announced the “Full Expensing: Invest for Less” permanent tax cut measure to help businesses offset their investment in information technology (IT) equipment, plants and machinery against tax.
“This means that for every million (British) pounds a company invests, they get 250,000 pounds off their tax bill in the very same year,” Hunt said, noting that it costs 11 billion pounds a year and is “the largest business tax cut in modern British history.”
“But those tax breaks don’t include things like training of skilled labor and apprenticeships. And yet the primary asset held by any company in 2023 is not its machines, but its skilled labor,” he said.
The Autumn Statement should recognize the value and importance of investing in the workforce and ensuring that each company has the skilled labor it needs for now and for the next decade, he said.
Another big giveaway in Hunt’s statement is cutting the main rate of National Insurance from 12 percent to 10 percent from January 2024. Bryson said all the chancellor has done is to park the issue of altering general tax thresholds.
“This is a short-termism-based piece of politics that hides the real problem in the UK. And the real problem is, let’s have the tax thresholds of income tax tied to the inflation rate so that more people avoid the difficulties of moving between tax bands,” he said.
The current UK income tax thresholds are being frozen until 2028 and as UK wages rise against the backdrop of high inflation, more people will have to start paying tax, and more people will have to pay higher rates of tax.
The Office for Budget Responsibility (OBR) estimated the freezes will create 3.2 million more taxpayers by 2028, and 2.1 million more people will pay higher rates of tax.
