To offset the additional expenses of the corona pandemic, the UK government is increasing its profit tax from 19 to 25 percent from 2023. The British Minister of Finance, Rishi Sunak, announced this on Wednesday at the presentation of the new budget.
“We will do everything we can to support businesses and citizens,” said Sunak.
Part of the new budget is an extension of the wage support scheme until September. The scheme was created last year to preserve as many jobs as possible. The British government pays 80 percent of the wages for the hours that cannot be worked due to the corona pandemic, for example for catering staff who cannot work due to the measures.
The wage support is said to have saved 11 million jobs.
Just like in the Netherlands, the corona support has resulted in considerably higher government expenditure. London wants to compensate for this higher expenditure in 2023 by increasing the corporate profit tax: from 19 percent to 25 percent. “We need to normalize our public spending as we move towards recovery, and I want to be honest about that today,” said the British minister.
The British government has borrowed £ 355 billion since the pandemic began
Those higher corona expenditures are now being financed in a different way. The British government has borrowed 355 billion pounds (411 billion euros) since the start of the pandemic, about 17 percent of GDP.
The support was badly needed because of the strict lockdowns necessary to curb the rise of the virus. As a result of the measures, the British economy shrank by about 10 percent in 2020.
Situation in the UK is now somewhat rosier
The situation in the United Kingdom is now a bit brighter, due to the success of the vaccination program. About 20 million Britons have had their first injection, which means that the economy can open faster than in other countries.
As a result, the economic outlook has also been revised upwards. The Office for Budget Responsibility budget institute expects the economy to be at pre-pandemic levels by mid-2022. That is six months earlier than the previous forecast in November.