UK budget seeks to 'turbocharge' growth

Britain's Conservative government was set to unveil Wednesday a budget update that aims to "turbocharge" the economy and is a vital part of its efforts to woo voters as it lags in polls before next year's expected election.

Finance minister Jeremy Hunt was to pledge to stimulate growth, cut taxes and bring inflation down further, according to advance excerpts from his speech due at 1230 GMT alongside the latest economic and fiscal forecasts.

Prime Minister Rishi Sunak has been boosted by recent news that he met his target to halve inflation, and won another lift on Tuesday after year-to-date borrowing undershot forecasts.

Yet the Tories still trail the main opposition Labour party, whose leader Keir Starmer has benefited from public anger over a cost-of-living crisis which has eroded wages, sparked strikes and left millions of Britons struggling to pay bills.

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'Reject high tax'

"The Conservatives will reject big government, high spending and high tax because we know that leads to less growth, not more," Chancellor of the Exchequer Hunt was due to say.

"Instead we will back British business with 110 growth measures... Taken together we will increase business investment in the UK economy by around £20 billion ($25 billion) a year over the next decade to get Britain growing."

Hunt will hike the UK minimum wage and lower the age at which it becomes payable, the Treasury said Tuesday and described the move as a record wage boost for three million low-paid workers.

Reports suggest Hunt could reduce headline rates of national insurance -- a payrolls tax paid by employees and employers alongside income tax -- as part of various measures aimed at stimulating economic activity.

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Sunak promised this week to lower taxation "carefully and sustainably" over time, but stressed that it could not do everything at once.

"It will take discipline and we need to prioritise. But over time, we can and we will cut taxes," he said.

He vowed to crack down on welfare cheats to get more people back into work, while investing £4.5 billion in the auto, aerospace, green energy and life sciences sectors, among others.

Turn a corner?

Hunt was set to indicate on Wednesday that the government wants to turn a corner after the Covid pandemic and spiking energy bills caused by Russia's invasion of Ukraine sparked unprecedented state intervention to support the economy and cash-strapped households.

Adding to the gloom, Britain's economy stagnated in the third quarter, weighed down by the Bank of England's interest-rate hikes that seek to tame elevated inflation but lift borrowing costs.

Inflation slowed sharply to a two-year low of 4.6 percent in October in a sign the cost-of-living crisis is easing, yet the rate remains the highest of the G7 world's richest nations.

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Food inflation remains in double digits, while households and businesses continue to pay high energy bills after the government scrapped last year's subsidies.

"After a global pandemic and energy crisis, we have taken difficult decisions to put our economy back on track," Hunt was set to say in his budget speech, pointing to economic growth and real-terms wages increase.

"But the work is not done. Conservatives know that a dynamic economy depends less on the decisions and diktats of ministers than on the energy and enterprise of the British people."

Labour's economy spokeswoman Rachel Reeves slammed the Conservatives' track record since they came to power in 2010.

"After 13 years of economic failure under the Conservatives, working people are worse off," she said.

"The Conservatives have become the party of high tax because they are the party of low growth. Nothing the Chancellor says or does in his autumn statement can change their appalling record."

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It is meanwhile widely rumoured that the government will announce cuts to inheritance tax and levies on home purchases, known as stamp duty.

Cutting inheritance tax, levied on estates at death, would controversially benefit the wealthiest in society, while reducing stamp duty would be aimed at boosting Britain's flagging housing market.

Source: AFP