The Treasury is looking to cut taxes ahead of the election
The UK entered a moderate recession in the second half of last year, according to recently released data. The country’s gross domestic product (GDP) has experienced a fall of 0.3% in the last quarter of 2023, mainly caused by the decrease of more than 1% in industrial production and in construction This decline in production s ‘has attributed to factors such as the increase in inflation and interest rates, which have affected the spending capacity of consumers However, in the full year, the indicators show a slight increase of 0.1%, which can be considered a flat line
The Treasury proposes to cut public spending after the election
With elections due in the coming months, the UK Treasury is considering a pre-election tax cut as a strategy to win popular support. However, this tax reduction would be accompanied by a subsequent cut in public spending after the elections, with the aim of reducing the fiscal deficit. This proposal has generated some controversy, since some experts argue that the country needs significant public investment to improve its infrastructure and increase productivity
Future prospects
Despite the current recession, the UK Conservative government remains hopeful that it will be short-lived. It is argued that the strength of the labor market, with wages outpacing inflation, could help boost economic growth in the coming months. However, some critics warn that the lack of significant economic growth in recent years and the need of major infrastructure investments could affect the government’s ability to stay in power