Business & Finance International

“Britain Facing Economic Recession,” Announces Rishi Sunak; What Does It Mean?

Rishi Sunak

Rishi Sunak’s government has announced that excise duty will not be imposed on electric vehicles from 2025

London: Britain is facing an economic recession. British Prime Minister Rishi Sunak has formally announced it. Rishi Sunak had recently become the Prime Minister of Britain and economic recession has become a challenge for him as soon as he took over the chair. Sunak’s government has taken many steps to emerge from this recession.

If the gross domestic product (GDP) of a country declines continuously for six months (2nd quarter), then this period is termed an economic recession. During a recession, companies make less money, and hence cannot pay salaries of employees on time, unemployment rises too. This means that the government gets less money in the form of tax to use on public services.

Britain Tax Rates

The windfall tax on energy companies has been increased from 25 percent to 35 percent. A temporary tax of 45 percent has been imposed on electric generators. Apart from this, now people earning 1.25 lakh pounds annually will also come under the ambit of top tax. Along with this, Sunak’s government has announced that excise duty will not be imposed on electric vehicles from 2025.

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Russia-Ukraine War’s Impact On Britain

Jeremy Hunt presented the Autumn Statement to the House of Commons, supported by British Prime Minister Rishi Sunak. Inflation in Britain is at its peak now. Because of this, the government has increased the tax rates. The government was facing trouble due to the mini-budget of former PM Liz Truss.

A report of the independent unit OBR (Office for Budget Responsibility) was also released along with the budget. The report stated that due to the war between Russia and Ukraine, there has been a strong increase in energy prices. Due to this, the economy of Britain has suffered a lot. It has been said in the report that there is no possibility of improvement in the economy till 2024.

Jeremy Hunt said that the whole world is facing a crisis of energy and inflation. He said that with this plan for stability, development, and public service, we will face recession. Rising inflation in Britain has increased the difficulties of the common people as well as the government. The inflation rate in Britain reached 11.1 percent in the month of October, breaking the record of 41 years. This is the highest inflation rate since the year 1981. The inflation rate in the month of September was 10.1 percent.

Experts believe that it is a difficult time for Britain. Because ever since Rishi Sunak took over as the Prime Minister, people were waiting for what kind of policy he would come up with to deal with inflation. Now everyone is looking forward that if the decision to increase the tax will prove to be correct. Because there is no relief in the short term.

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