Britain is in recession, Hunt makes it official; windfall tax hiked to 35%

British finance minister Jeremy Hunt announced a string of tax increases and tighter public spending in a budget plan on Thursday.

Outlining a 55 billion-pound plan — almost half from tax rises — to fix the public finances, Hunt said the economy was already in recession and set to shrink next year as it struggles with inflation forecast to average 9 per cent this year and 4 per cent in 2024.
 

The tax burden would hit 37.1 per cent of GDP, its highest sustained level since World War Two, at the end of its five-year forecast period, the OBR said, up from 33.1 per cent in the 2019-20 tax year.
 

“Credibility cannot be taken for granted and yesterday’s inflation figures show we must continue a relentless fight to bring it down, including an important commitment to rebuild the public finances,” he told parliament.
 

Hunt announced changes that will mean more people pay basic and higher-rate income tax, and lowered to 125,000 pounds the threshold at which people pay the top 45 per cent rate, as well as cutting tax-free allowances for income from dividends.

A levy on energy companies’ profits of will rise to 35 per cent from 25 per cent from Jan 1 until 2028, and a new temporary 45 per cent tax will be imposed on electricity generators, Hunt said. Public spending would grow more slowly than the economy but rise in overall terms, he said.