Criticizing the "decline" in a United Kingdom on the brink of recession, Jeremy Hunt outlined a long-term strategy focused on green energy, biotechnology, infrastructure, digital or creative industries.

Brushing aside calls for tax cuts from his own conservative camp, the Chancellor of the Exchequer said that in a context of soaring prices and a crisis in the cost of living, the "best tax cut (was ) lower inflation".

Inflation reached 10.5% in December in the United Kingdom.

In September and October, the short-lived government of Liz Truss released a budget with massive tax cuts and colossal energy aid, which shook markets, caused borrowing rates to soar and forced the Bank of England to intervene.

Mr. Hunt had said when presenting his latest budget in mid-November, based on forecasts from the public body OBR, that the country had already entered a recession.

Britain's Gross Domestic Product (GDP) did slightly better than expected in November, posting a slight increase for the second month in a row but, according to official statistics, it contracted by 0.3% in the three months to the end November compared to the previous three.

UK inflation by spending sector © Nalini LEPETIT-CHELLA / AFP

In November, the OECD predicted that the United Kingdom would experience the worst performance of the rich countries of the G7 over the next two years.

Lack of details

Mr Hunt admitted on Friday that the UK had “not returned to pre-pandemic employment or production levels”.

"We need to make Brexit a catalyst for bold choices," he said.

The government is counting on a reform of the European directive Solvency II, which governs insurance and is due to come into force within a few months, to attract "100 billion pounds of additional investment for the most productive British assets of this decade, such as clean energy or infrastructure".

The cost of living in the UK © Jonathan WALTER / AFP

Asked at a brief press conference about Brexit's negative impact on the availability of workers or the increased red tape, Mr Hunt replied that Britain's exit from the EU represented "a big change in our economic relationship with our neighbors (...) and, of course, there are short-term disruptions".

Finally, the Chancellor called on people who left the labor market during the pandemic to return to work, to alleviate a major shortage of workers caused in part by the administrative complications of Brexit but also by long-term illnesses.

Susannah Streeter, an analyst at Hargreaves Lansdown, said "details were sorely lacking" on how the government intended to implement the plan.

The minister hinted that he was saving his announcements for the March budget.

This speech comes after a series of criticisms from the business community.

Billionaire James Dyson, founder of the eponymous group, for example, described the economic strategy as "stupid" and "myopic".

CBI boss Tony Danker ruled on Monday that the country was lagging behind on green growth, lamented obstacles to the movement of skilled European workers and the abandonment of much of the regulations inherited of the EU this year.

The boss of the CBI employers' organization, Tony Danker, on November 21, 2022 in Birmingham © Oli SCARFF / AFP / Archives

He estimated on Friday, in reaction to the speech, that the Chancellor had laid down "a solid framework for growth. We hope that the budget in less than two months will include new strong measures to move us forward".

"Over the past 20 years, the UK has gone from being an advanced economy in terms of growth potential to a barely average economy" because of the "financial crisis, a decade of fiscal consolidation and Brexit", for their part commented the economists of the Berenberg bank.

"But half of that fall is due to Brexit" and, "caught up in his party politics, Hunt is unable to promise the main thing companies want to hear to boost investment: that he will (... ) to end Brexit uncertainty and mend ties with the EU, Britain's main market".

© 2023 AFP