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Brunei
Tuesday, November 29, 2022
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Brunei
Tuesday, November 29, 2022
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    UK will need to cut 200,000 jobs to avoid debt spiral

    THE STAR – The United Kingdom (UK) needs to cut 200,000 government jobs over the next couple of years to avoid adding billions to the national debt, according to the Institute for Fiscal Studies.

    Public-sector wages are on track to increase five per cent this year, around half the current rate of inflation but higher than budgeted when spending plans were drawn up in 2021.

    Simply to pay for those awards without increasing borrowing, the government will need to find GBP5 billion of savings this year alone, the think tank said.

    The analysis underscored the challenge Chancellor of the Exchequer Kwasi Kwarteng faces to keep the public finances under control without reversing any more of his tax-cutting pledges.

    Pressure is coming not just from his tax giveaways but also from higher spending, complicating any plan to stabilise debt as a share of gross domestic product.

    If pay increases with inflation in 2023, the government would need to cut another 100,000 jobs to keep the bill in check. PHOTO: THE STAR

    Last month, Kwarteng announced a GBP45 billion tax stimulus that sent the markets into a tailspin on concerns that borrowing would spiral out of control.

    On November 23, he plans to unveil a full fiscal plan with a forecast from the Office for Budget Responsibility that will incorporate government policies and the impact of changes to the economic outlook.

    The Treasury may bring the date forward. The Institute for Fiscal Studies said about 100,000 job cuts this year would ensure the overall wage bill was unchanged, and avoid cuts elsewhere in departments.

    If pay increases with inflation in 2023, the government would need to cut another 100,000 jobs to keep the bill in check.

    Departments have been told to find internal “efficiencies,” which is often seen as code for job cuts. There is a potential opportunity as the public-sector workforce grew by 250,000 over the pandemic to around 5.5 million.

    The government is already pushing through plans to cut around a fifth of the 500,000-strong civil service, those who work directly for the government.

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