LONDON – "It's a budget for the rich and the business," Chris Gills, chief economist at the Financial Times, chose to describe the budget presented by Chancellor of the Exchequer Jeremy Hunt to the British parliament.

The budget, which runs until April 2024, is the first for Rishi Sunak's government, after the mini-budget chaos caused by British Prime Minister Liz Truss that led to a historic collapse in the value of the pound sterling and the loss of more than £50 billion.

This budget comes against a backdrop of difficult economic and living conditions, and a wave of strikes that affect almost all and more sensitive sectors of government, and Sunak's government announced last November its fiscal directions, by increasing tax revenues and cutting public spending to save about £50 billion.

The budget did not bring any sudden or new measures, as the government resisted great pressure from the opposition to raise the tax on hydrocarbon companies and large companies that made unprecedented profits during this year, which the director of the Institute for Tax Studies (IFS), economist Paul Johnson, commented that this is the first budget "that does not bring anything new except for measures announced in advance."

A struggling economy

The figures presented by the Chancellor of the Exchequer showed that the British economy will not emerge from the crisis it is experiencing, at least this year, and according to the forecasts of the Office for Budget Responsibility (OBR) - which is considered the mastermind of the budget - the British economy will know a contraction of 0.2% instead of the 1.4% that was previously announced.

The standard of living of Britons and their purchasing power will continue to deteriorate, reaching the worst levels in more than half a century, mainly due to high inflation, high energy prices, and no increase in wages.

The UK economy will not grow until next year, and it will grow slightly to 1.8%, then 2.5% in 2025 and 2.1% in 2026.

The good news for the British economy is that it does not record a recession this year as the central bank has already announced, but may achieve a very small growth rate (0.1%).

The most important figure for Sunak's government and the central bank is inflation, as the budget predicted that it would move from 11% at the end of last year to 2.9% by the end of this year, a level that the central bank wants to reach at all costs.

The government also announced that it is on track to control public borrowing to remain at 97% of GDP and save £36bn over the next four years.

OBR may be more positive about inflation and the economy. But it is still projecting that 2022 and 2023 will see the biggest ever fall in living standards.

— Paul Johnson (@PJTheEconomist) March 15, 2023

Living crisis

British citizens are still suffering from rising energy prices, which have caused their purchasing power to deteriorate dramatically, and Sunak's government is very fortunate that the international situation is currently witnessing a decline in gas and oil prices to return to the pre-war level in Ukraine.

The British government took advantage of this situation to announce that it will not raise the annual ceiling on the energy price bill on homes, to remain in the range of £2500,3 instead of £70,<> previously announced, with support for each British home continuing to be provided in the range of £<> per month until next July.

Despite successive strikes in the health, education and transport sectors, the government has not announced any measure to raise wages and has refused to impose a new tax on the profits of fuel companies that have made historic profits, angering the British opposition.

The defence sector will not see any significant increase in spending, while Chancellor of the Exchequer Jeremy Hunt has faced considerable pressure to increase it, but in the end he announced that the government's plan will remain the same, i.e. a £11bn increase to the military budget over the next five years.

This is why we can’t have growth over the next few years. If households and businesses are crushed by high interest rates and low pay rises and the government plans to cut its share of spending in GDP it is impossible for growth to happen. And that is this government’s choice. pic.twitter.com/EAsWbMq32i

— Richard Murphy (@RichardJMurphy) March 15, 2023

No growth in sight

All economic analyses agreed that Sunak's government did not bring anything new in the budget, and Paul Johnson, director of the Institute for British Fiscal Studies, said in a series of tweets on his Twitter account that the government's talk of low inflation "should not obscure the reality of the worst deterioration in the quality of life in Britain in history."

The economist criticized the absence of any measures in the state budget that talk about increasing wages, which is the demand of tens of thousands of striking employees in various sectors of the country, warning at the same time that the government is now preparing "the beginning of reducing government expenditures beyond 2024."

For his part, the famous British economist Richard Murphy commented on the budget by saying that one indicator says that "it is impossible to achieve any growth in the coming years," citing the fact that households and businesses are affected by the high interest rate and the government's continued policy of refusing to increase wages in addition to reducing public expenditures that will lead to no increase in GDP.