From Breakingviews: UK's finance minister Jeremy Hunt has £30 billion of headroom in his March 15 budget to tackle problems like workers' pay. But, guerreraf72 argues, Britain needs a long-term business investment
Around a third of that comes from lower spending on energy subsidies to households, driven by an 80% fall in wholesale gas prices since the summer. Another third is due to higher tax receipts – an unexpected boon. The other key factor is lower spending on debt servicing. The drop in government bond yields after the 44 heady days of “Trussonomics” means that interest payments are running around 3.7 billion pounds below forecast this fiscal year.
they can afford a 3.5% annual rise in 2023-2024 fiscal year. That would be below the rate of inflation, which the OBR forecasts at 5.5%, and private sector pay growth, which is running at around 6.8%. If Sunak wants to give nurses and teachers an inflation-matching pay rise, Hunt will have to find 5 billion pounds, according to the Resolution Foundation.
Yet obsessing about an arbitrary target won’t cure Britain’s chronic slow growth. GDP will contract by 0.8% in 2023 and grow by just 0.9% next year, according to 21 forecasters polled by the Treasury. More worryingly, the Bank of England puts the long-term growth rate that is both sustainable and non-inflationary below 1% – nearly half what it was in 2010 to 2020.A slump in productivity – the amount of output per hour worked – is behind this slowdown.
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