UK autumn budget 2021: indebted Government

The capital gains tax is a levy on the profit from an investment. People pay the capital gains tax when they sell their investment. When people sell their stock shares, we say that the capital gains, or profits, are realized. The tax doesn’t apply to unsold assets. So people do not pay tax for stock shares until they sell the shares (Investopedia). What are the Government’s policies about capital gain taxes as well as other taxes? In Britain, the tax take is today the highest since 1948. There have been £40bn of tax increases this year already (Newcastle University). Tax cuts next year can help the Government win the next general election. How much has the Chancellor considered tax cuts in its UK autumn budget 2021? What political reasons are there behind UK autumn budget 2021

1. The budget presented by the British Treasury Secretary Rishi Sunak

Rishi Sunak, the Chancellor of the Exchequer, 29 October 2021 presented the UK autumn budget 2021 to the House of Commons. Rishi Sunak also presented a multi-year Spending Review. The Budget and Spending Review set out the Government’s plan to make the economy stronger. The Chancellor’s plan emphasizes investing in public services and supporting growth. The central claim of this strategy is the upgrading of the economy across the UK (Franco British Chamber). These claims show that the Government likes to overclaim about its ‘world class’ performance and policies. The Conservative Party seems to have shifted towards higher public spending in some areas. The Government appears to have made the shift to win the next general election. The Government’s purpose is to attract the voters in the North that voted Conservative in 2019.

Change in GDP

Gross domestic product (GDP) measures the value of goods and services produced in a country. It estimates the size of and growth in the economy. According to the Office for National Statistics, the British Government states that the UK’s GDP has grown by 0.1% in July 2021. However, it remains 2.1% below its pre-coronavirus pandemic level (February 2020). Production output increased by 1.2% in July 2021 and was the main contributor to GDP growth. Monthly GDP growth slowed in July 2021, growing by 0.1% compared with 1.0% growth in June 2021. This is the sixth consecutive month of GDP growth, as Britain’s COVID-19 restrictions continued to ease to varying degrees.

As stated in the Irish Examiner, Mr Sunak said the headline inflation was expected to average 4% next near – which suggests prices in Britain over the winter will rise sharply. At the same time, growth, in GDP terms, is now seen at 6.5%, up from the 4% expansion expected in March. The Guardian, Sunak predicts that GDP will grow by 6% next year, 2.1% in 2023, 1.3% in 2024, 1.6% in 2025, and 1.7% in 2026. However, this is easier said than done.

British people’s condition in the period of the COVID-19 pandemic

The COVID-19 pandemic has brought with it significant disruption to the UK economy. The Government took necessary action to slow the spread of the virus. The UK government placed many restrictions on people and businesses. Alongside this, the Government provided exceptional support to jobs and incomes. The Government’s vaccination programme has now allowed almost all COVID-related restrictions to be lifted and the economy to reopen. As regulations have eased, the labour market has continued to recover (HM Treasury). However, experts at Newcastle University believe that the economy of the UK appears to move from crisis to crisis. The rise in the national living wage is below the inflation rate. Professor Vee Pollock, Dean of Culture and the Creative Arts states that the impact of Covid-19 on freelancers and those under 25 has been significant. He believes that Covid19 is likely to have made existing inequalities worse. He adds that the Government has not taken practical actions to solve the problem.

Sunak’s Claims: Are they plausible?

How plausible are the claims made in the UK autumn budget 2021? The Chancellor says inflationary pressures affect the UK economy, with the Office for Budget Responsibility (OBR) forecasting that inflation will be above 4% next year. He says the forces are global and are “impossible for us to address alone”. However, the Government will act to support households, he says.

The Chancellor says forecasts from the Office for Budget Responsibility show the economy will grow by 6.5% this year. The Chancellor claims that his budget delivers a more robust economy for the British people: more substantial growth, public finances and employment. He says he will give people the support they need with the cost of living and levelling up. He states that the budget does not draw a line under Covid but does begin building an economy post-pandemic.

Sunak adds: “If anybody still doubts it, today’s budget confirms it. The Conservatives are the real party of public services.”. (The Guardian). Does the UK have the budget to fulfil the plan presented by the Chancellor? Sunak seems to have political purposes for his unrealistic Autumn Budget 2021 and Spending Review.