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Britain announces big tax rises and spending cuts over the next five years

MARY LOUISE KELLY, HOST:

Economic gloom has settled over the United Kingdom today. As that country's finance minister Jeremy Hunt unveiled his long-awaited autumn budget, he warned of a tough road ahead. Willem Marx reports from London.

WILLEM MARX, BYLINE: This was never going to be an easy sell for Jeremy Hunt. The U.K. is currently in the grips of a fiscal storm exacerbated by the decisions of his predecessor Kwasi Kwarteng and the then-Prime Minister Liz Truss. A few weeks ago, Kwarteng announced the largest tax cut in plans for 50 years. But they were not sufficiently costed, and after an awful reaction from the financial markets, Hunt has entirely reversed course. His proposals to Parliament today have turned the ruling Conservative Party's economic policy on its head and will leave the country with the highest tax burden since the Second World War. They include $65 billion in tax increases and spending cuts over the next five years, with severe long-term implications for Britain's schools, health system and elderly care. Mr. Hunt acknowledged the country was in recession and that his new package would be a bitter pill for many to swallow.

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JEREMY HUNT: We are not alone in facing these problems, but today we respond to an international crisis with British values. We are honest about the challenges, and we are fair in our solutions.

MARX: While the government has largely blamed the economic headwinds on the pandemic and war in Ukraine, political opponents pointed out that the U.K.'s problems are considerably worse than many of its international peers. Rachel Reeves, the finance minister for the main opposition Labour Party, said that the British people would be left with the consequences of conservative chaos.

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RACHEL REEVES: All the country got today was an invoice for the economic carnage that this government has created. Never again can the Conservatives be seen as the party of economic competence.

MARX: New independent official forecasts suggest Britain's economy will shrink next year more than any other large European country. And amid spiraling double-digit inflation, U.K. living standards over the next two years will now fall the fastest in modern history. For NPR News, I'm Willem Marx in London.

(SOUNDBITE OF MABEL AND 24KGOLDN SONG, "OVERTHINKING") Transcript provided by NPR, Copyright NPR.

Willem Marx