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UK - United in Paying for Past ?

Updated: Nov 22, 2022

During the last two years, the global economy has witnessed immense growth despite all the issues that were not less than once in a century occurring. All this was possible “thanks” to the developed economies printing, not billions but trillions of money to fight the battle. But now the same good deeds are haunting the various governments as the time to pay for the “free” money is upon them.

One of the leading nations in this has been the United Kingdom and in the past month or so the uncertainty in the economy has been at historic highs. This was further increased by the budget measures announced on November 17th to fill the $50Bn financial gap.

The biggest measure was to increase the windfall tax on oil and gas companies from 25% to 35% for the next five years. Though most people might agree with such a move when there is an urgent need to increase the investments in the sector to increase production in near future then it is a negative measure.

In another set of measures, it announced a cap on rent increase to 7% and a minimum wage hike of 9.7%. All these measures would end up increasing the Tax to GDP ratio by only 1% over the next five years. But meanwhile, the Debt to GDP ratio will increase to a 63-year high of 97.6% by 2025-26.

It is not a given that the measures announced will end up paying for the past as the uncertainty levels at the economy and political levels are high over the next 12 months. And such situations or even worse are about to unfold in various parts of the world as the financial gap becomes wide in years to come.


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