LONDON (CU)_United Kingdom’s finance minister Rishi Sunak announced an extension to his costly emergency aid programmes to support the country’s economy through the pandemic-induced lockdown, but also announced a tax hike for many businesses, in his budget on Wednesday (March 3).
Delivering his annual budget speech in Parliament, Sunak said that there will be a five-month extension of his huge jobs rescue plan, the continuation of the emergency increase in welfare payments, an extension of the value-added tax (VAT) cut for the hospitality sector, as well as more help for the self-employed.
“First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis,” he said.
“Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that. And third, in today’s budget, we begin the work of building our future economy.”
According to the chancellor, UK’s economy is likely to grow by 4 per cent this year and will regain its pre-pandemic size in the middle of 2022. The country’s gross domestic product is expected to grow 7.3 per cent, 1.7 per cent and 1.6 per cent in 2022, 2023 and 2024, respectively.
Accordingly, Sunak announced a rise in taxes, saying he would raise the corporation tax to 25 per cent from 19 per cent starting from 2023, by which time he says the economy should have recovered from the pandemic crisis.
“Even after this change the UK will still have the lowest corporation tax rate in the G7 [Group of Seven bloc of nations] – lower than the United States, Canada, Italy, Japan, Germany and France,” he noted.
The chancellor also added that he would freeze the threshold for the higher rate of income tax, as well as the amount of money that people can earn tax free.
Meanwhile, UK’s borrowing rate is expected to fall to a historically high 10.3 percent of GDP in 2021/22, from the country’s highest post-World War rate of an estimated 17 per cent in the 2020/21 financial year which is about to end.
Nevertheless, Sunak promised to do “whatever it takes” to drive the economy through what he hopes will be the final months of pandemic restrictions.
