2024-07-30 15:09:28
In the United Kingdom, debate is growing over public spending. During her first speech to Parliament, new Labor Finance Minister Rachel Reeves accused the former Conservative government on Monday July 29 of having a hidden overspend of 22 billion pounds sterling, or almost 26 billion euros Europe.
Published on: 07/30/2024 – 5:09 pm.
4 min
Even before coming to power in early July, Labour, which is committed to tight control of public finances, has warned it will inherit a delicate position after 14 years of Conservative government. A long-awaited intervention by Finance Minister Rachel Reeves before Parliament outlined this review which promises to be decisive for policy of the new executive. « We inherited a £22 billion surplus » (around 26 billion euros) which is ” screen » by the Conservative Party now in opposition, said the minister.
Among the non-financial policies that appeal, Rachel Reeves points out the program to send some asylum seekers to Rwanda, the program for hospitals or payment contracts for government officials. You are sure that this can produce a jump of ” 25% of the budget deficit this year » without measures to correct it. So the minister said he launched ” urgent and important work » to find savings of 5.5 billion pounds this year and more than 8 billion next year.
Abandonment of many infrastructure projects
The Minister of Finance, the first woman to hold the position, also gave 30 October for her first budget letter which will include ” talk about decisions “, he warned. He has been announcing cuts in subsidies for heating oil in the winter for pensioners, suggesting that they are connected under the resource condition. The minister, however, promised that the government, in line with the plan of the Labor Party, will not increase social security contributions and taxes for ” working person ».
According to Sunday TimesThe government is specifically considering canceling or suspending certain projects, in particular the part of the high-speed rail line HS2 which is planned to go to Euston station, in the center of London, in favor of a station outside of England. mushroom.
However, Labor rules out any idea of austerity and the government should follow the independent recommendations to give millions of civil servants a salary increase above inflation, which has dropped to 2% after having soared to 11% at the end of 2022. But with a deficit of 6% of GDP in 2023, the pace for innovation is very limited. This is why additional taxes, especially on capital gains or inheritance, are expected.
His Conservative leader Jeremy Hunt immediately responded that the state of public finances was “ that was obvious before the election to anyone who bothered to look “. He also accused the Chancellor of “ A desperate attempt to pave the way for tax increases that he didn’t have the courage to tell us before “, he frowned.
Budget room is narrow for wisdom
Rachel Reeves campaigned on a promise ” discipline to do » on the budget, with Labor often calling the budget crisis triggered two years ago by Liz Truss during her brief 49-day stay in Downing Street.
The government of Keir Starmer therefore the financial space is narrow to deliver the change promised during his election campaign. This financial stability has caused tension in most. Keir Starmer last week suspended seven MPs who had voted, against the government’s advice, in favor of an amendment that aimed to abolish a cap on child benefit for large families, accusing it of being harmful to the left of the child.
The pro-development group Britain Remade testified for its part that the reduction of investment spending on infrastructure and especially railway lines is “not not without risk “. The Institute of Budgetary Studies, for its part, estimates that ” Rachel Reeves has a right to be happy. It is clear and obvious that the financial systems he inherited are incompatible with Labour’s ambitions for public services. “, even if you notice that it is” it’s not a big surprise ».
According to the Capital Economics research house, the most likely scenario is that ” On October 30, the President unveiled a combination of tax increases and a little more borrowing. »
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