UK to unveil plan for tax hikes and spending cuts to fight soaring inflation

© Maja Smiejkowska, Reuters

Britain is set Thursday to unveil hefty tax rises and spending cuts at the risk of worsening a cost-of-living crisis for millions in the recession-bound economy.

A day after official data showed UK inflation rocketing to a 41-year high above 11 percent, finance minister Jeremy Hunt will trigger a fresh era of austerity after the calamitous and short-lived tenure of prime minister Liz Truss.

The chancellor of the exchequer will insist his strategy "protects our long-term economic growth" while being "compassionate" towards the most vulnerable.

"We aren't immune to these global headwinds, but with this plan for stability, growth and public services, we will face into the storm," he is expected to tell parliament, according to the Treasury.

Hunt and Prime Minister Rishi Sunak insist tough action is needed after Truss unleashed a package of unfunded tax cuts that caused panic on financial markets.

"Tackling inflation is my absolute priority and that guides the difficult decisions on tax and spending we will make on Thursday," Hunt said, as Britain's Press Association quoted the Treasury as saying the package would be worth £54 billion ($64 billion).

Hunt at the weekend likened himself to the penny-pinching miser Ebenezer Scrooge in Charles Dickens' festive favourite "A Christmas Carol", but argued that his plan will "make sure Christmas is never cancelled".

Bank of England governor Andrew Bailey on Wednesday told MPs he would not take a pay rise this year.

(AFP)


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