Buckle up! Economy set for take-off amid tax cuts and falling inflation, Rishi Sunak says | Politics | News


Rishi Sunak has declared the UK economy “will really take off” as taxes are slashed and inflation falls.

The Prime Minister told the Daily Express the “second big cut” in National Insurance – saving the average worker £900 a year – is proof “things are looking brighter.”

Some 27 million people will from today benefit from National Insurance being cut to 8p, according to the Treasury.

And Mr Sunak declared: “This is the right approach, because fundamentally I believe National Insurance is unfair. It means those who work pay a double tax – through income tax and National Insurance.

“So, today is a really important day to show we’re backing the workers and strivers, and we’re finally getting our country back on track after the double whammy of Covid and Ukraine.

“There is now no doubt that things are looking brighter – inflation is falling, wages are rising and taxes are being slashed.

“That’s the Conservative way, and that’s how Britain’s economy will really take off.”

Since January, the main rate of employee national insurance has been cut from 12% to 8% for UK workers.

More than 2 million self-employed people will also benefit from the main rate of Class 4 NICs being cut from 9% to 6%, alongside the abolition of the requirement to pay Class 2 NICs.

This saves an average self-employed person on £28,000 over £650 a year.

The tax cuts, worth £20bn a year, mean people on average salaries will now pay less in personal taxes than they would in any other G7 country.

The Conservatives said the average full-time nurse, earning £38,900 will be £1,053 better off, while the average police officer, pocketing £44,300 a year, will keep an extra £1,270.

A cleaner on £21,058 will see their yearly National Insurance contributions fall by £340, while a junior doctor on £65,000 will be £1,508 better off.

The Prime Minister hailed the fall in inflation – from 11.1 per cent to 3.4 per cent – and the Government is now hoping interest rates will begin to fall, easing mortgage pain for millions of households.

Treasury officials also believe the NIC cuts will stimulate growth “by bringing more people into the labour market”.

But Labour have claimed council tax hikes and frozen thresholds for national insurance and income tax would make the average family worse off overall.

The figures are based on forecasts from the Office for Budget Responsibility which show tax rises from frozen personal allowances will amount to £41.1 billion by the end of the decade, while tax cuts over the same period total just £21.4 billion.

But Economic Secretary to the Treasury, Bim Afolami MP said: “Labour now oppose making fully-funded tax cuts and ending the double tax on work. They would hike up taxes and take us back to square one.

“Labour must explain why they think people should be taxed twice for work and how they will pay for their £2.7 billion unfunded spending while reducing taxes on working people. The truth is without a plan, taxes will rise and working people will pay.

Rishi Sunak and the Conservatives are sticking to the plan to cut taxes for 29 million people, putting £900 back in the pockets of the average worker on £35,400 as we continue to make progress on our long-term goal to end the double tax on work.”

Pensioners will also next week receive a boost in the cost of living crisis, with the State Pension set to increase by another £900.

This means pensioners will receive more than £11,500 a year, thanks to the Triple Lock vociferously defended by the Daily Express.

Meanwhile, households breathed a sigh of relief as energy bills fell by £238 a year at the start of this month.

The price of energy for a typical household that uses gas and electricity and pays by Direct Debit will go down by £238. This will reduce the energy price cap from £1,928 to £1,690 per year, a reduction of around 12%.

Falling energy bills is expected to further feed a fall in inflation, potentially paving the way for interest rate cuts later this year.

With the Conservatives trailing Labour by over 20 points in the opinion polls, strategists are hoping to woo voters with a series of tax cuts and measures to reward workers after years of economic difficulties.

Growth dipped in the second half of 2023, although it was slightly smaller than initially thought.

GDP dropped by 0.5 per cent over that period, with two consecutive falls – the technical definition of a recession.

However, the fourth quarter was marginally less grim, with a 0.31 per cent reduction in activity rather than 0.34 per cent.

Education Secretary Gillian Keegan last night revealed more than 150,000 parents and guardians have signed up for a new free childcare offer for two-year-olds.

The new scheme was rolled out on Monday, allowing working parents of two-year-olds now able to access 15 hours of Government-funded childcare each week.

This will be extended to working parents of all children older than nine months from September this year, before the full rollout of 30 hours a week to all eligible families a year later.

It is aimed at helping parents juggle their caring responsibilities with returning to work, thereby boosting economic productivity.

Education Secretary Gillian Keegan said: “This Government is investing more than ever before in childcare, giving hard-working parents the support they need – so they no longer have to choose between having a family or a career.

“Our plan is working, with 150,459 more children now benefiting from quality childcare, and we expect more parents to take up the offer moving forward.

“Our childcare support is already helping well over a million families across the country, and we will stick to our plan to deliver a brighter future through security and certainty for hard-working parents.”


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