“In the long run, Brexit will have a greater impact (on the economy) than an epidemic,” Hughes said. According to him, leaving the EU will “reduce GDP by about four percent in the long run.”
Commenting on the BBC, he added: “We hope that the impact of the epidemic will further reduce this production (i.e. GDP) by two per cent.” GDP is a measure of the size of an economy.
Hughes said just hours after his office revised its earlier forecast for value-added tax (VAT) revenue this year as a result of higher-than-expected inflation, “it’s very difficult for us right now.”
As the cost of living rises, the finance ministry will raise நான்கு 4 billion more this year than expected. Next year and next year, VAT revenue will be more than £ 9 billion due to rising prices.
Inflation “stops income growth”
The authority overseeing taxes and their use said it expects inflation to be 4.4 per cent, more than double what is tolerated by most central banks, including the UK. This will not decrease to 2.1 percent until 2024.
OBR therefore warned that depreciation of the currency could reach “the highest rate recorded in the UK in the last thirty years”, i.e. since the 1970s. At the time, as the economy stagnated and inflation soared, Britain was struggling with stockflation.
So the Think-Tank Resolution Foundation warned that next year’s inflation would “almost stop revenue growth” and could be worse, despite a typical employee pay rise of £ 29,000. These are expected to increase by 3.6 per cent and other revenues by 1.5 per cent.
A Labor source on Wednesday accused the government of benefiting from the crisis triggered by VAT revenue.
“This money is basically coming from the people in the UK, who are paying more because of rising (living) costs. The government does not have a plan to address the shortage of skilled workers, which is often due to shortages on the shelves and problems with the supply chain,” the unnamed source told The Daily Telegraph.