Britain’s Starmer warns October budget to tackle public finances will be ‘painful’ | Wilnesh News

LONDON – British Prime Minister Keir Starmer told the nation on Tuesday that the upcoming October budget will be “painful” as he paved the way for spending cuts to tackle what the government said was a 22 billion pound ($29 billion) USD) financing gap.

“Given the situation we find ourselves in, we have no choice,” Starmer said in a speech in the garden of 10 Downing Street, the prime minister’s official residence.

“Those with the broadest shoulders should bear a heavier burden, which is why we are hitting non-residents,” he added, referring to British residents who live outside the UK for tax purposes.

“Those who cause the mess should do their part to clean it up, which is why we are strengthening the powers of the water regulator and supporting tough fines for water companies who allow sewage to flood our rivers, lakes and oceans. Starmer said. “But just like when I responded to the riots, I must ask the country for help, and I must ask a lot of you, accepting short-term pain for long-term gain, accepting the difficult trade-offs of real solutions.”

Starmer’s Labor Party came to power in early July after a landslide election victory. Britain’s Parliament is due for its summer break from July 30 to September 2, even as the new government has grappled with challenges, including a series of riots across the country involving far-right groups and activists. Capacity crisis In the prison system.

At the same time, the Labor government has benefited from a continued decline in inflation, which is hovering around 2%, as the politically independent Bank of England begins to cut interest rates and the economy returns to growth in the past. Two consecutive quarters.

Labor said in its election manifesto that it would raise 7.35 billion pounds ($9.71 billion) in 2028-29 by closing tax loopholes for homeless individuals, scrapping tax breaks for private schools, closing descriptive Act as a “tax loophole” for private equity investors and impose a “time-limited windfall profits tax” on oil and gas companies.

Starmer and Finance Secretary Rachel Reeves have repeatedly said they will prioritize economic growth and fiscal responsibility in their decisions.

In his speech on Tuesday, Starmer said Britain’s public finances were “worse than we thought” and accused the previous government of covering up a £22bn “black hole”.

Labor released the shortfall figure at the end of July and blamed it on overspending and a poor budget by the previous Conservative government.

Former finance secretary Jeremy Hunt July Write to Simon KeyesThe head of the UK civil service has called Labour’s claims about public finances “deeply disturbing”.

Mr Hunt said the alleged £22bn shortfall differed from the “main estimate” of spending submitted to MPs for approval on July 17. of was shut down by its senior officials.

The Institute for Fiscal Studies is an independent research group, argued before Labor was aware of the “broad outlines” of the size of the deficit and had no advance knowledge during the campaign of the cuts and tax increases needed to maintain public services.

“Growth – and frankly I mean wealth creation – is the priority of this Labor government,” Starmer said on Tuesday.

Starmer said he did not want to go down the means-tested route of making winter fuel payments – a type of pension payment – a move that has been criticized Controversial even within his own party – but added that there would be more “difficult” decisions.

Starmer said there would be no tax increase for “working people” in the October budget, but gave no further details. Labor has previously pledged not to increase VAT, National Insurance (a general tax) or income tax.

The speech was criticized by politicians from other parties.

Keir Starmer said cutting winter fuel payments was a choice he had to make. But when asked about the wealth tax, Rachel Reeves said their spending commitments would not require additional investment. So “His hard choice is not to tax billionaire wealth,” Green Party deputy leader Zach Polanski said on social media network X.

Conservative politician Kemi Badenoch, the frontrunner to replace Rishi Sunak as party leader, said the speech showed Starmer “He made promises during the campaign that he could not keep, and now he is being discovered.”

Lib Dem leader Ed Davey also said The Conservatives have left a “toxic legacy” that requires “bold and ambitious action from the government to address”.

CNBC has reached out to the Conservative Party for comment.

David Denton, technical advisor at investment management firm Quilter Cheviot, said in a report that financial markets and investors are still waiting for specific announcements from the government.

“During Labour’s election campaign, the party highlighted various taxes that it would not seek to increase, such as national insurance, VAT and income tax. Therefore, an increase in capital gains tax (CGT) seems reasonable,” Denton said. “Alignment with income tax rates, or even minimal increases, could impact investor behavior.”

He added, “Another potential issue is that unless anti-piracy measures are announced in any plans, we could see a surge in properties on the market as homeowners rush to sell their investment properties ahead of the new legislation.”