Budget statement 2022: Martin Lewis delivers verdict after government rolls out tax hike budget

Martin Lewis delivered his verdict on the budget after the government presented its autumn filing, including billions of pounds in tax increases and spending cuts.

Jeremy Hunt vowed to “address the cost-of-living crisis” and “rebuild our economy” as he outlined plans for tax hikes and spending cuts.

The chancellor said there would be a “shallower recession” as a result of his measures, but the Office for Budget Responsibility (OBR) believed the economy was “now in a recession”.

Money Saving Expert founder Martin Lewis said that while the budget has provided some relief to those on the lowest incomes through benefit increases and the extension of support to energy bills, those in the “middle restricted” will face difficulties.

“It’s going to be difficult for everyone,” Lewis told BBC World at One.

“As the cost-of-living crisis is biting those in the middle who are not receiving any benefits or other payments, they will not receive electricity support either, except for the energy price guarantee, so what the chancellor has done is that the state is lowering rather extensive energy bills.

He added that within the small print of the warranty changes is that the government will undergo a consultation on a “volume cap” on energy consumption.

“Which is a fancy way of saying they’ll give bass support [energy] users,” Lewis said.

“Whether they can implement it before 2024 is an interesting question.”

The Office for Budget Responsibility has predicted that more than half a million people will lose their jobs, while living standards will plummet due to rising prices.

Jeremy Hunt acknowledged there will be a ‘very big fall’ in living standards

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Jeremy Hunt has acknowledged that there will be a “big drop” in living standards

(EPA)

Former Labor minister Chris Bryant said OBR data showed household disposable income “will fall, after what it has done today, by 7% over the next two years”.

The OBR’s assessment states: “Rising prices erode real wages and reduce living standards by 7% overall in the two financial years to 2023-24 (erasing out the growth of the previous eight years), despite more than 100 billion pounds of additional government support.

“The squeeze on real incomes, rising interest rates and falling house prices are all weighing on consumption and investment, plunging the economy into a recession that will last just over a year from the third quarter of 2022, with a peak-to-trough decline in GDP of 2 per cent.

“Unemployment increases by 505,000 from 3.5% to a peak of 4.9% in the third quarter of 2024”.

Mr Hunt was setting out a package of £30bn in spending cuts and £24bn in tax increases over the next five years.

His package is in stark contrast to his predecessor Kwasi Kwarteng’s ill-fated plan for £45bn in tax cuts less than two months ago, which spooked markets, drove up the cost of borrowing and contributed to a fall in the Liz Truss short lived administration.

Mr Hunt said: “I understand my predecessor’s mini-budget motivation and he was right to identify growth as a priority. But unfunded tax cuts are just as risky as unfunded spending.”

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