With inflation near 10%, an economy in recession according to the Bank of England, confidence in the depths and a depressed pound, the new Chancellor of the Exchequer Kwasi Kwarteng hopes to administer a revivifying potion to households and businesses.
"During the worst energy crisis in generations, this government is with the people," Kwarteng told parliament, adding that he wanted to "reform the supply side of the economy" by "lowering taxes to boost growth.
"This is how we will reverse the vicious circle of economic stagnation," he insisted.
The flagship measure of the "mini-budget", as it is nicknamed, will be the freezing of energy bills for two years, at 2,500 pounds for an average household, a rebate of at least 1,000 pounds financed by the government.
Companies are not to be outdone and see their invoices covered for about half for six months.
Gas and electricity prices have soared since the start of the war in Ukraine, due to limitations on the supply of hydrocarbons from Russia, and the United Kingdom is particularly dependent on gas.
– Conservative Recipes –
This massive support for energy bills should cost 60 billion pounds for the first six months, quantified Kwasi Kwarteng, whose cocktail of measures also includes a good dose of revenue prized by the Conservatives, in particular tax cuts.
The lowering of social contributions is confirmed for companies ("social levy") as for households as well as the suspension of certain ecological levies.
The Minister of Finance also confirmed a reduction in the tax on real estate transactions and announced a lowering of the maximum rate of income tax, from 45% to 40%.
Prime Minister Liz Truss has herself acknowledged that her government's policy will mostly favor the better-off.
'Instead of defending working people, the Conservatives are protecting the profits of energy giants', which have benefited from skyrocketing oil prices since the start of Russia's invasion of Ukraine, the official charged. Finance Labor Party, Rachel Reeves.
She notes that the energy price cap put in place by Liz Truss and Kwasi Kwarteng will cost tens of billions of pounds which will be financed by borrowing, with an addition which should fall on the taxpayer.
The anti-poverty association Oxfam speaks for its part of a "win-win for the richest" policy.
Economists worry that the mixture of tax cuts and massive aid, financed by borrowing, promises to be toxic for public finances.
The Institute for Budget Studies (IFS) has warned that the Truss plan risks putting debt on an "unsustainable path".
– “Get back to work” –
Another Conservative mantra hammered home by the new Chancellor of the Exchequer: "get Britain back to work".
While the British labor market is suffering from a serious lack of workers, access to minimum income ("universal credit") will be accompanied by obligations for certain people who work less than 15 hours a week.
This could include "applying for a job, participating in job interviews", adds the Treasury, which also wants to encourage those over 50 to return to the labor market, from which they have come out in large proportions since. the pandemic, in particular because of long illnesses.
In order to attract investment in the United Kingdom and in particular in the financial sector of the City, Kwasi Kwarteng and Liz Truss also want to appear as heralds of post-Brexit deregulation.
Kwasi Kwarteng notably announced on Friday the removal of limits inherited from the EU on City bonuses.
Finally, the Treasury aims to create 38 deregulated "investment" zones, similar to the free ports project of the previous Conservative government.
Kwasi Kwarteng also warned that the right to strike would be more framed and limited to cases where wage negotiations failed, after the previous government had already authorized the use of temporary workers to mitigate the impact of social movements.
© 2022 AFP