Tax on energy giants, help for the precarious … What the new austerity budget contains

Demanding budgetary choices. British Finance Minister Jeremy Hunt on Thursday unveiled his measures to redress the finances of the United Kingdom, a cure of austerity combining cuts in public spending and tax increases. Here are the main points.

55 billion pounds

Jeremy Hunt confirmed Thursday “a budgetary consolidation of 55 billion pounds”, of which 25 billion will come from tax increases and 30 billion from spending cuts, except in Health and Education whose budgets will increase.

Tax on energy giants

The British government is tapping into the energy giants, whose profits have been boosted by the energy boom and the war in Ukraine. The managing director of the oil giant Shell, Ben van Beurden, had himself called in early October to tax energy companies more. An exceptional tax, introduced in May, will increase from 25% to 35%, and will be extended for three years, until 2028. The possibility of reducing this tax in exchange for investments, much criticized by environmental NGOs, remains in place , but it is now much more of an incentive for low-carbon projects.

The British Minister of Finance also announced “a new temporary tax of 45% on producers of electricity”, including renewables, who have also benefited from the global rise in energy prices. The government is also extending the freezes on certain tax thresholds, particularly on income, which in times of inflation will automatically increase tax revenues. The highest tax bracket is lowered and will thus affect more of the wealthiest taxpayers. The Minister of Finance is also lowering the tax thresholds for dividends and capital gains, and will introduce a road tax on electric vehicles, which will therefore be taxed like thermal engines, from 2025.

Slow spending

With the exception of Health and Education, which are seeing their budgets increase, the other ministries will have to remain within the nails of the planned expenditure until the fiscal year 2024-2025. They will then see the increase in their envelopes slow down until 2028.

Chancellor of the Exchequer Jeremy Hunt had already announced that assistance to households to pay the energy bill would be reduced. From April, the aid will intervene beyond 3,000 pounds per year, instead of 2,500 pounds, which represents a saving of 14 billion pounds.

Help for the most vulnerable

The Chancellor announced £26 billion in purchasing power support on Thursday. Retirees will see the pensions paid by the state increase in line with inflation, as will the recipients of certain allowances. The minimum wage will be raised from April. The budget for the NHS, the National Health Service, which has been underfunded for years, will increase by £3.3billion next year and the year after, and schools will get an extra £2.3billion a year . Companies, also very affected by the upheavals of the British economy, will receive a boost of 13.6 billion pounds to limit the increase in their local taxes.

Jeremy Hunt also confirmed certain infrastructure spending, in particular the government’s intention to build the new Sizewell C nuclear power plant, carried by the French electrician EDF. For this project, “the contracts for the first investments will be signed with the players concerned, including EDF, in the coming weeks”.

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