The UK Chancellor Jeremy Hunt will reveal the 2022 Autumn Budget Statement today. During former Prime Minister Liz Truss’ short-lived
The UK Chancellor Jeremy Hunt will reveal the 2022 Autumn Budget Statement today.
During former Prime Minister Liz Truss’ short-lived tenure, the UK’s government reversed a series of monetary and fiscal policies quickly after they were implemented due to unexpected shrinkage in UK’s economy. The new administration under newly-appointed prime minister Rishi Sunak is now dedicated to cutting down national spending to get the country’s economy back on track. The conservative party’s economic revival plan comes amidst rising costs and a nationwide energy crisis resulting from the sanctions of Russian natural gas.
Moving forward, the UK will pursue a more hawkish monetary policy during the short-to medium term, as the Central Bank is preparing to further increase interest rates. This approach will bring inflation down in the short-term. In addition, the pound will likely appreciate in value. However, these measures will also likely have several downsides. Higher interest rates will inevitably incite nationwide recession due to higher borrowing costs. As a result of decreased economic activity, the nationwide unemployment rate will rise in the medium- to long-term.