As unlikely as it may seem, there is a week in British politics where Boris Johnson is not in the limelight. All eyes were on a man who was 1.70 meters tall and extremely thin, a sorcerer Raised in California, a family billionaire and convict “Thatcherist,” tasked with controlling government accounts led by a prime minister who tends to spend money as if there is no tomorrow. Rishi Sunak, the chancellor The (Treasury Secretary) of Downing Street, will present his first post-pandemic budget on Wednesday, along with spending ceilings for the next three years.
Follow-up information from last weekend indicates that Rishi Dish (Sexy Rishi, as he is known among his many fans) will open a three ring circus. First, you’ll maintain the spending your boss wants on fixing deficiencies in the National Health Service (NHS, in its English acronym), and balance investments in infrastructure across the UK. A nod to Labor voters from the so-called red walls that Johnson charmed in 2019. Second, he will try to rein in the beasts of the hard-wing Conservative Party, who consider betrayal their essence, the corporate tax increase announced last month. March (from 19% to 25%), and a 1.5% increase in Social Security contributions (National Insurance, in English terms).
“Of course I want to cut taxes, but to do that we must first get our public finances on a sustainable path,” Sunak warned his critics at the Conservative Party congress in Manchester in early October. “A thoughtless ideology is a very dangerous thing. I care what shows its usefulness, not the purity of any dogma,” he challenged from the pulpit. And a third clue: strengthening Johnson’s promise that the post-Brexit era will bring an economy with higher wages and more skilled workers.
For now, the minimum wage, which the UK measures hourly, will rise from 10.50 euros/hour to 11.27 euros/hour, for workers over the age of 23 (below are the categories 21-22 years old and apprentices, which will also increase). An increase of 6.6% which is more than double the current inflation of 3.1%, and it “leads to the announced goal of ending low wages at the end of this term,” Sunak told the BBC.
More than 8,000 million euros was allocated to transport infrastructure in the north of England, the region hardest hit by austerity in a decade; and an additional 7,000 million, which will be added to the 14,000 already planned thanks to a tax increase, to end shortages, delays and waiting lists (over five million patients) of the National Health Service. The level of public spending planned for the next three years (remaining legislature, if no electoral progress) shows an average increase of 3% per year. A rhythm reminiscent of the happy New Labor years of Tony Blair and his Treasury Secretary, Gordon Brown.
But that’s a misleading number, as most of the money will go to the NHS, which is a bottomless pit (about 40% of the budget). Public education, local government, police or judicial administration will not compensate their income, approaching 20% of the cuts they have pulled from the austerity years of David Cameron’s conservative government. “And the real problem is that spending can happily grow at 3% a year while the economy is growing at the same rate,” warned Paul Johnson, director of the Institute for Fiscal Studies think tank. “But this is not an estimate that is handled, among other things, because of the negative effect it will have on Brexit. Couple that with the pressure of a very old population and a starving NHS, and Sunak may not be the last finance minister to raise taxes and at the same time be forced to seek money to support other public services”, economists warn.
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Sunak is playing with forecasts for a much faster and stronger recovery from the pandemic than previously thought, which would reduce debt levels calculated just a year ago and allow the minister to have the extra cash to keep his boss, Boris Johnson’s constant promises, on board. Instead, he rejected the idea of a new confinement, despite the current worrying infection rate (about 50,000 daily). And he didn’t even want to mention the possibility of having to use Job Retention Scheme (Job Retention Program), a program similar to the Spanish ERTE but much more generous, involving the disbursement of more than 80,000 million euros.
The tension between the British Prime Minister, the resident of 10 Downing Street, and his Minister of the Economy (neighbor 11), is history. If the former controls the political leadership and is first among equals from the government, second it controls the State bureaucratic apparatus from a highly centralized power. Sunak, however, was Johnson’s successor when, just before the pandemic, he decided to get rid of his predecessor, Sajid Javid (now in charge of the Ministry of Health). Despite his immense popularity, as can be seen in the conservative congress in Manchester, and that all groups posited him as a possible successor to Johnson, he tried not to arouse the concerns of his boss, who was not used to sharing the stage.
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