UK PM Liz Truss’ administration may have to cut 2,00,000 jobs to avoid UK debt crisis: Report
The Institute for Fiscal Studies said the UK has to eliminate nearly 200,000 government jobs to prevent adding billions to the national debt
As it has been only weeks since UK Prime Minister Liz Truss’s administration took charge of the office, the Institute for Fiscal Studies said in a report that the United Kingdom has to eliminate nearly 200,000 government jobs over the following few years to prevent adding billions to the national debt. In the public sector, salaries are expected to rise by 5% this year, around half the current rate of inflation, however, it is greater than budgeted when expenditure plans were created in the year 2021, The Star reported.
According to the London-based research institute, the UK government would need to find £5 billion of savings this year alone just to pay for those awards without escalating the borrowing. The report further highlighted the difficulty that Chancellor of the Exchequer Kwasi Kwarteng has been facing in maintaining the public finances while not going back on any of his tax-cutting promises. Notably, the markets plunged last month when Kwarteng announced a £45 billion tax stimulus amid concern that borrowing would run amok.
It is pertinent to mention that Kwarteng’s tax giveaways aren’t the only thing putting pressure on the economy; greater spending is also a factor, further challenging any strategy to stabilise the debt as a share of GDP.
UK economic crisis
As per the Institute for Fiscal Studies, eliminating around 100,000 jobs this year would maintain the overall pay bill and prevent budget cuts in other departments. In 2023, if pay rises in line with inflation, the government would have to eliminate another 100,000 positions in order to balance the budget. Departments have been asked to find internal “efficiencies,” which is often referred to as job layoffs, The Sun reported.
Apart from this, plans to eliminate around a fifth of the 500,000 civil services—those who directly serve the government—are already being pushed through by the administration. It said the personnel cut might result in annual savings of £3.5 billion.
Meanwhile, Kwarteng revoked a tax cut for the wealthiest households that had saved £2 billion out of the £45 billion, but he has vowed to keep other programs in place.
The newly elected Liz Truss government has come in for a ton of criticism ever since the value of the British pound hit a historic low against the dollar. Further, Truss had acknowledged earlier that there has been a communication gap between the UK PM and her chancellor, adding that she has taken a lesson from it. the British Prime Minister said, “I accept we should have laid the ground better. I have learned a lesson from that,” as per media reports.
As a result, Truss is currently having trouble stabilising the economy of the nation. However, she claimed that her strategy will bring economic development back to Britain.
