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British Conservatives Lowered Inflation Ahead of Goals, so They Are Giving Tax Cuts to Citizens – German Liberals Dug a Hole in the Budget, so They Are Ditching the ‘Debt Brake’ in a Panic

  British give tax cuts, German prepare a huge increase in the budget deficit. Taken side by side, the situation in the UK and Germany are v...


British give tax cuts, German prepare a huge increase in the budget deficit.

Taken side by side, the situation in the UK and Germany are very illuminating of the current moment in Western Europe.

In many ways, the two countries face similar problems, like rampant immigration and low economic growth.

The two government are trailing in the polls, assailed by frontrunners in the opposition – the UK Labour leftists, and the German conservatives Christian Democracy and AfD.

But the fundamental difference we see now between the two countries in their responses to these crises lies in their economic preparedness.

In the UK we notice that even when globalists, the conservatives tend do the economic homework.

And as for liberals, they spend like there’s no tomorrow, and can only survive with emergency measures in place.

So, about a year away from a General Election, the British government will cut taxes for millions of workers, starting early 2024.

The New York Times reported:

“Jeremy Hunt, Britain’s top financial official, announced a slew of measures intended to jolt the nation’s stagnant economy by encouraging corporate investment and pushing more people into the work force. At the same time, his political party, the Conservatives, hopes that the tax giveaways will improve its electoral chances, as it languishes 20 points behind the opposition Labour Party in the polls.

National insurance, a tax paid by employers and workers that funds state pensions and some benefits, will be cut by two percentage points to 10 percent for employees, Mr. Hunt said, saving an average employee about 450 pounds ($560) next year. This tax is separate from other income taxes, which were not changed.”


The government will also ‘expand tax breaks for business investment’ and ‘reduce taxes for the self-employed’.

All that could increase business investment by £20 billion a year, Chancellor Hunt.

“’Because of the difficult decisions we have taken in the last year’” Mr. Hunt said in a speech to lawmakers in Parliament on Wednesday, inflation is slowing and government borrowing is lower than previously forecast. ‘I said we would cut taxes when we could, but only responsibly and only in a way that did not fuel inflation’, he added.”


The British economy turned a corner, with inflation rate dropping to 4.6 percent in October – so now they can cut taxes.

“This week, Mr. Sunak signaled a switch in emphasis, saying he had made ‘difficult decisions’ on inflation, such as resisting big pay raises for striking public sector workers. ‘Now you can trust me when I say we can start to responsibly cut taxes’, he said.”

As he deals with a major budgetary crisis, German Finance Minister Christian Lindner will propose a supplementary budget for this year.

The changes include ‘the suspension of limits on new borrowing’, as he tries to fill the 60B euro hole opened by a court ruling last week.

The constitutional court ruling blocked ‘the transfer of unused funds from the pandemic to green investment’.


The ruling strained the uneasy three-way Scholz coalition between his Social Democrats, Lindner of the pro-business Free Democrats (FDP) and the Greens.

Reuters reported:

“‘In consultation with the chancellor and the vice chancellor, I will present a supplementary budget for this year next week’, Lindner told reporters on Thursday.

‘We will now put spending, especially for the power and gas price brakes, on a constitutionally secure footing’, he said, adding this required a supplementary budget.

A finance ministry spokesperson said the government would propose a lifting of the debt brake, which limits Germany’s structural budget deficit to the equivalent of 0.35% of gross domestic product, by proposing to parliament an ’emergency situation’ for 2023.”


A majority of lawmakers must vote in favor of the budget changes.

The debt brake was written into the constitution, to no avail. It was first suspended in 2020 to support companies and health systems during the COVID-19 lockdowns economic fallout.


But of course, the defense ministry clarified that the special 100 billion-euro fund for modernizing the armed forces was safe.

“‘In principle, the Bundeswehr special fund is exempt from the budget freeze’, the ministry said in a statement, making clear that also applied to projects partially financed from regular defense spending in future.”

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