The UK authorities have revised their previous forecasts of the country’s economic recovery. The latest estimates look much more optimistic. Although the British pound has not yet reacted to the news, it will probably try to win back some of its losses against the US dollar. Britain’s finance minister Rishi Sunak revealed the latest forecast according to which the UK economy is expected to grow by 4% in 2021 and by 7.3% in 2022. Rishi Sunak reported that the country’s economy would return to its pre-pandemic levels in mid-2022, six months earlier than previously forecast. According to the Office for Budgetary Responsibility (OBR), UK GDP will increase by 4% in 2021 and by 7.3% in 2022. The OBR projects gross domestic product to grow by 7.3%, 1.7%, and 1.6% in 2022, 2023, and 2024 respectively. Meanwhile, the UK government will continue to provide financial support to citizens and businesses at least until October this year. Thus, furloughed employees will receive 80% of their usual pay, while the list of self-employed people entitled to financial aid will be expanded. Moreover, £1.6 billion will be allocated for vaccination and £700 million will be paid to theaters, museums, and sports clubs. All in all, social and economic support programs to counter the coronavirus crisis will cost the country £352 billion. This is a heavy burden for the budget. Therefore, tax hikes are needed to cope with huge public spending. This applies to those citizens who earn between £12,500 and £50,000 - they will be taxed at 20%. Taxes for individuals with the income above £50,000 and £150,000 will be raised to 40% and 45% respectively. The Chancellor explained that tax hikes were necessary to avoid the swelling of public debt not seen since World War II.
