U.K. Unveils Largest Tax Increases and Spending Cuts in a Decade
LONDON—The U.K. government announced sweeping tax increases and spending cuts on Thursday, becoming the first major Western economy to start sharply limiting its spending growth after years of ramped-up fiscal stimulus during the pandemic and recent energy subsidies.
The measures mark a second major shift in U.K. economic policy in just a matter of months, after previous British Prime Minister Liz Truss spooked financial markets by pledging to jump-start growth with tax cuts funded by more borrowing. Her successor Rishi Sunak is now taking economic policy in the other direction, trying to convince investors the U.K. is serious about eventually taming rising government debt. His challenge will be to regain market confidence without causing major damage to an economy widely expected to enter a recession.
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