LONDON: British finance minister Rishi Sunak cut taxes for workers and reduced a duty on fuel on Wednesday as he sought to soften a severe cost-of-living squeeze against the backdrop of fast-rising inflation and slowing economic growth.
Announcing a half-yearly budget update overshadowed by the conflict in Ukraine, Sunak set out measures that would inject about 17.6 billion pounds ($23.2 billion) into the economy in the coming financial year.
“The actions we have taken to sanction (Russian President Vladimir) Putin’s regime are not cost-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.”
In response to the hit to living standards — 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.
“That’s a 6-billion-pound personal tax cut for 30 million people across the United Kingdom,” he said, adding it would save workers more than 330 pounds a year each and was the largest single personal tax cut in a decade.
But Sunak stuck to his plan to increase the level of national insurance contributions from next month to help fund more spending on health and social care after the COVID-19 pandemic.
In his Spring Statement, Sunak announced a cut in fuel duty of 5 pence per liter, to start later on Wednesday and last until March next year. He said the basic rate of income tax would be reduced by one pence in the pound in 2024, when Britons are next to due to vote in a general election.
However, the Office for Budget Responsibility (OBR), which produces the forecasts that underpin the government’s budget planning, said Sunak was undoing only one sixth of the tax rises he has previously announced.
The OBR also 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.
Sunak and Prime Minister Boris Johnson have been under pressure, including from lawmakers within their Conservative Party, to do more to help households as they struggle with the rising cost of living.
Sunak announced new forecasts showing the British economy will grow more slowly this year than previously predicted and that inflation will be much higher.
The forecasts drawn up by the OBR showed the economy was likely to grow by 3.8 percent in 2022, a sharp slowdown from a forecast of 6.0 percent made in October.
Inflation, as measured by the consumer price index, is now seen at 7.4 percent in 2022, compared with October’s forecast of 4.0 percent.
Earlier, data showed Britain’s consumer price inflation hit a 30-year high of 6.2 percent last month, driven by soaring costs for energy and food which poorer households especially may find hard to cut back on.
The OBR forecast that gross domestic product would grow by 1.8 percent, 2.1 percent and 1.8 percent in 2023, 2024 and 2025.
In October, the OBR had forecast growth of 2.1 percent, 1.3 percent and 1.6 percent over the next three years.
The OBR said borrowing by the government was due to come in 55 billion pounds lower than it expected in October.
Sunak said the fiscal rules he set for the public finances would be met with “a clear safety margin.” ($1 = 0.7579 pounds)
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UK’s Sunak cuts taxes to soften cost-of-living hit
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UK’s Sunak cuts taxes to soften cost-of-living hit
- Sunak set out measures that would inject about $23.2 billion into the economy in the coming financial year
- "The actions we have taken to sanction Putin's regime are not cost-free for us at home," said British finance minister
Afghans mourn villagers killed in Pakistani strikes
- Afghans gathered around a mass grave Sunday to bury villagers killed in overnight air strikes by Pakistan, which said its military targeted militants
BIHSUD: Afghans gathered around a mass grave Sunday to bury villagers killed in overnight air strikes by Pakistan, which said its military targeted militants.
The overnight attacks killed at least 18 people and were the most extensive since border clashes in October, which left more than 70 dead on both sides and wounded hundreds.
“The house was completely destroyed. My children and family members were there. My father and my sons were there. All of them were killed,” said Nezakat, a 35-year-old farmer in Bihsud district, who only gave one name.
Islamabad said it hit seven sites along the border region targeting Afghanistan-based militant groups, in response to suicide bombings in Pakistan.
The military targeted the Pakistani Taliban and its associates, as well as an affiliate of the Daesh group, a statement by the Ministry of Information and Broadcasting said.
Afghan government spokesperson Zabihullah Mujahid said “people’s homes have been destroyed, they have targeted civilians, they have committed this criminal act” with the bombardment of Nangarhar and Paktika provinces.
Residents from around the remote Bihsud district in Nangarhar joined searchers to look for bodies under the rubble, an AFP journalist said, using shovels and a digger.
“People here are ordinary people. The residents of this village are our relatives. When the bombing happened, one person who survived was shouting for help,” said neighbor Amin Gul Amin, 37.
Nangarhar police told AFP the bombardment started at around midnight and hit three districts, with those killed all in a civilian’s house.
“Twenty-three members of his family were buried under the rubble, of whom 18 were killed and five wounded,” said police spokesperson Sayed Tayeeb Hammad.
Strikes elsewhere in Nangarhar wounded two others, while in Paktika an AFP journalist saw a destroyed guesthouse but there were no immediate reports of casualties.
- ‘Calculated response’ -
Afghanistan’s defense ministry said it will “deliver an appropriate and calculated response” to the Pakistani strikes.
The two countries have been locked in an increasingly bitter dispute since the Taliban authorities retook control of Afghanistan in 2021.
Pakistani military action killed 70 Afghan civilians between October and December, according to the UN mission in Afghanistan.
Several rounds of negotiations followed an initial ceasefire brokered by Qatar and Turkiye, but they have failed to produce a lasting agreement.
Saudi Arabia intervened this month, mediating the release of three Pakistani soldiers captured by Afghanistan in October.
The deteriorating relationship has hit people in both countries, with the land border largely shut for months.
Pakistan said Sunday that despite repeated urging by Islamabad, the Taliban authorities have failed to act against militant groups using Afghan territory to carry out attacks in Pakistan.
The Afghan government has denied harboring militants.
Islamabad launched the strikes after a suicide blast at a Shiite mosque in Islamabad two weeks ago and other such attacks more recently in northwestern Pakistan.
The Daesh group had claimed responsibility for the mosque bombing, which killed at least 40 people and wounded more than 160 in the deadliest attack in Islamabad since 2008.
The militant group’s regional chapter, Islamic State-Khorasan, also claimed a deadly suicide bombing at a Kabul restaurant last month.
The overnight attacks killed at least 18 people and were the most extensive since border clashes in October, which left more than 70 dead on both sides and wounded hundreds.
“The house was completely destroyed. My children and family members were there. My father and my sons were there. All of them were killed,” said Nezakat, a 35-year-old farmer in Bihsud district, who only gave one name.
Islamabad said it hit seven sites along the border region targeting Afghanistan-based militant groups, in response to suicide bombings in Pakistan.
The military targeted the Pakistani Taliban and its associates, as well as an affiliate of the Daesh group, a statement by the Ministry of Information and Broadcasting said.
Afghan government spokesperson Zabihullah Mujahid said “people’s homes have been destroyed, they have targeted civilians, they have committed this criminal act” with the bombardment of Nangarhar and Paktika provinces.
Residents from around the remote Bihsud district in Nangarhar joined searchers to look for bodies under the rubble, an AFP journalist said, using shovels and a digger.
“People here are ordinary people. The residents of this village are our relatives. When the bombing happened, one person who survived was shouting for help,” said neighbor Amin Gul Amin, 37.
Nangarhar police told AFP the bombardment started at around midnight and hit three districts, with those killed all in a civilian’s house.
“Twenty-three members of his family were buried under the rubble, of whom 18 were killed and five wounded,” said police spokesperson Sayed Tayeeb Hammad.
Strikes elsewhere in Nangarhar wounded two others, while in Paktika an AFP journalist saw a destroyed guesthouse but there were no immediate reports of casualties.
- ‘Calculated response’ -
Afghanistan’s defense ministry said it will “deliver an appropriate and calculated response” to the Pakistani strikes.
The two countries have been locked in an increasingly bitter dispute since the Taliban authorities retook control of Afghanistan in 2021.
Pakistani military action killed 70 Afghan civilians between October and December, according to the UN mission in Afghanistan.
Several rounds of negotiations followed an initial ceasefire brokered by Qatar and Turkiye, but they have failed to produce a lasting agreement.
Saudi Arabia intervened this month, mediating the release of three Pakistani soldiers captured by Afghanistan in October.
The deteriorating relationship has hit people in both countries, with the land border largely shut for months.
Pakistan said Sunday that despite repeated urging by Islamabad, the Taliban authorities have failed to act against militant groups using Afghan territory to carry out attacks in Pakistan.
The Afghan government has denied harboring militants.
Islamabad launched the strikes after a suicide blast at a Shiite mosque in Islamabad two weeks ago and other such attacks more recently in northwestern Pakistan.
The Daesh group had claimed responsibility for the mosque bombing, which killed at least 40 people and wounded more than 160 in the deadliest attack in Islamabad since 2008.
The militant group’s regional chapter, Islamic State-Khorasan, also claimed a deadly suicide bombing at a Kabul restaurant last month.
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