Britain’s economy in great trouble, now India’s deal raises hope

Britain economy : The latest official figures released this week by the Rishi Sunak-led UK government show a shrinking economy and a two-year-long recession. The former British Indian finance minister, who took office at 10 Downing Street last month with a promise to correct the financial flaws of the erstwhile Liz Truss’s disastrous mini-budget, has promised to put a halt to rising inflation as a priority. Economic experts largely agree to the challenge, even as they regard the prospect of a Free Trade Agreement (FTA) with India as a much-needed economic development.

Dr Anna Valero, Senior Policy Fellow at the London School of Economics (LSE) Center for Economic Performance, explains that the economic crisis in the UK is due to some new and some old factors. She says high inflation, high interest rates and tightening of fiscal policy come against a backdrop of particularly poor productivity growth in the UK since the financial crisis, which has been a drag on real wages.

With this said that there are large and persistent inequalities in the UK as well. Combined, poor growth and high inequalities have made Britain a stable nation in urgent need of a new economic strategy to put the country on a stronger, fairer and more sustainable development path. Asked how the India-UK FTA could affect this scenario, the analyst welcomed the fact that Sunak was committed to a deal. She says such a deal could create growth opportunities for the UK, especially if the UK’s key sector of comparative advantage is expected to grow significantly over time.

lowered market confidence

The energy crisis triggered by the Russia-Ukraine conflict is being seen as a major factor behind Britain’s current living woes of rising domestic bills. Dr George Dibb, head of the Center for Economic Justice at London’s think tank Institute for the Public, says that long before the current crisis the UK economy was suffering from too little investment, economic disparity between and within its regions, and consequently low growth. happened.

Things were again made worse by the huge impact on energy prices of Russia’s invasion of Ukraine, which has resulted in a cost of living crisis. And the last straw that broke the camel’s back was the truss government’s recent mini-budget and its proposed unfunded tax cuts undermining market confidence in both the UK government and the economy.

UK government preparing to present important budget

Let the constant churning of new prime ministers and governments with a regularly changing agenda make business decision-making even more challenging and the need of the hour is a period of stability with a plan that meets the development agenda as a fad. Will do The government is preparing to present an important autumn budget statement next week. Dr. Dibb says the government is planning to do away with the dividend tax allowance, but that would be only a small step in the right direction, and we think it should go ahead and start taxing dividends at the same rate as income tax. should do. Not only will billions more be raised to help support homes and businesses, but this injustice will also end.

The government needs to pay attention to these things

The City of London Corporation also urged the government to focus on promoting growth and investment. Policy chair Chris Howard says leveling up should include all parts of the UK, including London, as the success of the capital benefits every corner of the country. The National Institute for Economic and Social Research (NIESR), Britain’s independent economic research institute, has been asked to focus on such an equitable development agenda due to the terms of the trade shock caused by the Russia-Ukraine conflict. Where the cost of imports has risen faster than the value of food and especially energy exports. The Prime Minister needs to focus on enabling the poor families to deal with these crises.