Jeremy Hunt confirms UK is in recession as he announces tax rises and spending cuts

The chancellor has delivered his Autumn Statement, with tax rises and spending cuts on the horizon.

Jeremy Hunt faced parliament this morning as he revealed his economic plan for the coming months.

He began by saying that he was unveiling a plan to revive the economy, saying: “We are honest about the challenges and we are fair in our solutions… We will also protect the vulnerable.”

The chancellor added that the plan will lead to ‘a shallower downturn’ as well as ‘lower energy bills’, and that the government has three priorities: “Stability, growth and public services”.

Hunt said he will deliver a consolidation of £55bn via tax rises and spending cuts, saying: “Just under half of the £55bn consolidation coming from tax, and just over half from spending, this is a balanced plan for stability.”

He also confirmed that the UK is now in recession, according to the OBR, with the chancellor saying GDP is forecast to shrink by 1.4% next year before it returns to growth in 2024.

What the chancellor has announced on tax:

• As a percentage of GDP, tax will increase by only 1% over the next five years.
  
• When it comes to personal tax, Hunt says he will reduce the 45p rate threshold from £150,000 to £125,140 – those earning £150,000 or more will pay around £1,200 more a year.
  
• On top of that, the annual capital gains tax exempt amount will be cut from £12,300 to £6,000 next year and down to £3,000 from April 2024.

When it comes to public spending, Hunt said: “Our plan for the cost of living delivers lower inflation, lower mortgage rates, a shallower downturn, and lower unemployment.

“But it also involves public spending discipline, so I turn next to how we protect public services through a challenging period.”

The chancellor went on to say that the NHS and education will be protected ‘as much as we can’, but added that public spending will grow ‘slower than the economy’.

Government departments will need to find savings to keep up with inflation, and more than 600,000 people on Universal Credit will soon be asked to meet with work coaches.