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British govt. unveils austerity budget as recession bites

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
Britain's Chancellor of the Exchequer Jeremy Hunt makes an autumn budget statement in the House of Commons in London on November 17, 2022. (PRU handout image via AFP)

As recession bites, British Prime Minister Rishi Sunak and his Finance Minister Jeremy Hunt have unveiled an austerity budget: a massive package of $65 billion of tax hikes and spending cuts.

On Thursday, Hunt unveiled his fiscal plan that he claimed would bring down government debt as a percentage of economic output in the course of five years.

The chancellor of the exchequer also confirmed the tough measures were necessary to bring financial stability after recent turmoil. He said the measures would alleviate rather than aggravate the economic downturn.

Citing Britain's Office for Budget Responsibility, Hunt told parliament on Thursday that “the UK, like other countries, is now in recession.”

A recession is a period of temporary economic decline during which a country's economy shrinks for two three-month periods - or quarters - in a row. 

The budget was put forward some two weeks after the Bank of England (BoE) warned that the United Kingdom was facing its longest recession since records began - until mid-2024 - as it lifted interest rates by the most in more than three decades to combat an inflation expected to hit nearly 11 percent.

Furthermore, the finance minister at the weekend likened himself to the penny-pinching miser Ebenezer Scrooge in Charles Dickens' festive favorite A Christmas Carol. However, he argued his plan would "make sure Christmas is never canceled."

Following Hunt's statement, the Office for Budget Responsibility, a fiscal watchdog, released its November growth forecast, predicting that the UK's economy would shrink by 1.4 percent next year, with living standards falling seven percent within the next two years and eliminating the last eight years of gains.

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