UK’s Hunt Seeks Budget Plan to Make Recession Short and Shallow

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(Bloomberg) — The UK’s new financial plan will seek to make any recession as short as possible, Chancellor Jeremy Hunt said.

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“I want to make sure that this recession, if we are in one, is as short and shallow as possible,” Hunt said in an interview on Sky News on Sunday.

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The UK economy shrank in the third quarter for the first time since the first quarter of 2021. That means Britain is the only Group of Seven economy that has yet to fully recover from the pandemic.

Hunt will announce his plan on Nov. 17 as he seeks to plug a budget shortfall estimated at more than £50 billion ($56 billion). Reports that he will be raising revenue from income tax, implement windfall charges on energy companies and put levies on inheritance have sparked panic in the Conservative Party.

Cutting spending and raising taxes is necessary to tame inflation and control rising government debt, the chancellor told Sky News.

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“We’re all going to be paying a bit more tax, I’m afraid,” Hunt said. “But I think in a fair society, as we are in the UK, we need to recognize that there’s only so much you can ask for people on the very lowest income. So that will be reflected in the decisions that I take.”

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Hunt is set to extend a freeze on income tax thresholds and allowances, raising about £5 billion a year by 2027-28, the Financial Times reported. A plan to raise the top rate of income tax or lower the threshold at which the tax bracket starts is also being considered, according to the Telegraph.  

Read More: What to Expect in UK Chancellor’s Plan to Fix Fiscal Hole