Excerpt from CoStar
Increase In National Living Wage Good For Employees, Not So Good For Payroll, As Country Enters Recession
Another month, another budget in the United Kingdom, but for many hoteliers the economic reforms don't go far enough to inspire confidence.
The United Kingdom has trod a rocky economic path in the past two months, and government officials hope their next budget will pave an easier way forward.
On Thursday, U.K. Chancellor of the Exchequer Jeremy Hunt released his Autumn Statement, which usually comprises tweaks to the main budget announced every spring. Hunt's budget contains major ramifications for businesses, including hotels, grappling with increases to energy and food-and-beverage costs, an inflation rate of 11.1% — the highest in the country since 1981 — and every likelihood of a recession in 2023 and perhaps 2024.
According to the U.K.’s Press Association, there is a deficit of 55 billion pounds sterling ($65.35 billion) in the country’s finances, a hole which likely will be plugged by spending cuts and increased taxes, which Conservative Party Members of Parliament regard as anathema.
In a speech today to the House of Commons, Hunt laid out his updated budget and painted a grim economic picture.
“In the face of unprecedented global headwinds … today we deliver a plan … to rebuild our economy,” he said.
Hunt said his plan will underline “stability, growth and public services” and blamed the situation on the Russian invasion of Ukraine, before admitting that the U.K. is in recession.
“Inflation will be 9.1% this year, and 7.4% next year,” Hunt said, citing the government’s Office for Budget Responsibility. “The U.K. is in recession, and things will get worse before they get better.”
Discernible income will be affected with the U.K. tax burden now at its highest level in 70 years.
Hunt's budget plan — initially called the "un-budget" — was an about-face response to the short-lived premiership of Liz Truss and former chancellor Kwasi Kwarteng's "mini-budget," which was announced less than two months ago on Sept. 23. Hunt was chosen as chancellor by Truss' successor, current Primer Minister Rishi Sunak.
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