UK's Hunt announces tax cuts for sluggish economy

STORY: Britain will cut taxes for workers and give businesses more incentives to invest.

That was the message from finance minister Jeremy Hunt as he unveiled a new budget on Wednesday.

”We have taken difficult decisions to put our economy back on track. We’ve supported families with rising bills, cut borrowing and halved inflation. Rather than a recession, the economy has grown rather than falling as predicted. Real incomes have risen. Our plan for the British economy is working. But the work is not done.”

Hunt announced a bigger-than-expected cut in social security contributions as well as big rises in welfare payments and the state pension.

The government also said it would cut the rate of contributions to the National Insurance social security system for employees by two percentage points.

Hunt claimed measures in his plan would raise business investment by $25 billion a year within a decade, or nearly 1% of GDP.

But in the short term, at least, Britain’s economy moves slowly.

Gross domestic product is expected to grow by 0.7% next year – much weaker than the expansion of 1.8% forecast by officials in March.

Britain’s economy has struggled with the highest inflation rate among its rich country peers.

Although the pace of price growth has slowed from more than 11% just over a year ago, to 4.6% in October.

Hunt and Prime Minister Rishi Sunak will hope Wednesday’s budget gives a boost to both the economy, and their electoral chances.

Where polls show the ruling Conservatives trailing the opposition Labour party ahead of an expected election next year.

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