‘Relief Package’ For UK People to Soften Cost-Of-Living

Web Desk — As part of its effort to provide economic relief to its citizens, the British Government announced on Wednesday that workers’ taxes would be cut and fuel duties would be lowered. 

Britain’s Finance Minister Rishi Sunak while making the announcement said the government wanted to help ease a stinging cost-of-living squeeze against a backdrop of fast-rising inflation and slowing economic growth.

Announcing a half-yearly budget update overshadowed by the conflict in Ukraine, Sunak announced measures that would inject about 17.6 billion pounds ($23.2bn) into the economy in the coming financial year.

“The actions we have taken to sanction (Russian President Vladimir) Putin’s regime are not free for us at home,” he told parliament. “The invasion of Ukraine presents a risk to our recovery as it does to countries around the world.” 

With inflation seen peaking at nearly 9 percent in late 2022 – Sunak said he was increasing the threshold at which workers start to pay national insurance, or social security, contributions by 3,000 pounds ($3,958.50) from July.

This is a 6-billion-pound personal tax cut for 30 million people in the United Kingdom, he said, adding that it would save workers more than 330 pounds a year each, and was the largest single cut in a decade.

As part of his Spring Statement, Sunak announced a cut in fuel duty of 5 pence per liter that will take effect mid-week and last until March next year. In 2024, when Britons are next due to vote in a general election, the basic rate of income tax will be reduced by one pence in the pound.

However, the Office for Budget Responsibility said living standards, adjusted for inflation, would not recover their pre-pandemic levels until the 2024/25 financial year and would suffer their biggest contraction in the 12 months from April since at least the mid-1950s.

Boris Johnson and Sunak have been under pressure from lawmakers within the Conservative Party to do more to help households struggling with rising costs of living.

A new forecast by Sunak shows that the British economy will grow slower than previously predicted this year and that inflation will be much higher.