The UK is in severe financial straits, and its plan to raise taxes on the rich attracts attention

As the resumption of the British Parliament in September approaches, the UK is currently deeply mired in severe financial and livelihood difficulties. British Prime Minister Keir Starmer has warned that the UK seems to be in a “black hole” of financial and social management. Things may get worse before they get better, and the government will take tough measures in all aspects to repair the country's foundation.

Judging from economic data, in the second quarter of this year, the UK's gross domestic product increased by 0.6% quarter-on-quarter, the unemployment rate dropped to 4.2%, and the inflation rate remained at 2%. Although the economy shows signs of recovery, there are many challenges. Ian Begg, a professor at the London School of Economics and Political Science, pointed out that during the 2008 financial crisis and the COVID-19 pandemic, the British government borrowed heavily to implement rescue plans, resulting in high public debt. In July this year, the British government's public debt reached about 2.7 trillion pounds, accounting for 99.4% of GDP. According to a report by the National Institute of Economic and Social Research in the UK, the budget deficit will remain above 3% of GDP in the next five years, and public debt will be about 100% of GDP.

At the same time, the UK is facing huge pressure on public expenditure. A report by the think tank Institute for Government shows that if the current expenditure plan is adhered to, the UK will face the tightest funding situation since 2015, and the quality of public services may decline. Starmer has repeatedly mentioned the problem of overcrowding in prisons. During national riots, the government needs to update the number of prison beds daily. The think tank warns that if the capacity of public services continues to decline, more prisoners may be released, triggering social security problems. In addition, the waiting list for non-emergency patients in the National Health Service may still be higher than before the epidemic.

Facing the increase in public expenditure needs, the British government is considering raising taxes. Since increasing personal income tax and other measures will trigger negative emotions, the government plans to raise taxes on the rich in the autumn budget. The Conservative government has abolished tax breaks for “non-domiciled residents,” and Starmer also emphasizes that those who are capable should bear more responsibilities. A report by the British think tank Resolution Foundation shows that in the first quarter of 2024, British household wealth was six times higher than the country's gross domestic product, while wealth-related taxes have hardly changed. Increasing taxes on wealth investment income and inheritance is expected to bring in 10 billion pounds in tax revenue. However, ***ysts believe that increasing taxes is not a fundamental solution. The British government should also take measures such as increasing public investment to promote economic growth. The future fiscal measures of the British government and their impact on the economy and society are attracting much attention from all sectors.