Propose increased taxes and spending cuts
Increased taxes and government spending cuts are the main themes of a new budget approved by the government which will be submitted this week. The Prime Minister discussed the plan in the Sunday magazine TV show Silfrið on national television yesterday.
The priority is getting the inflation down, according to Prime Minister Katrín Jakobsdóttir.
When the last financial budget was announced, last spring, the inflation rate was about six percent and the policy rate was less than three percent. Today, however, the inflation rate is above ten percent and after twelve straight rate hikes, the policy rate is now at 7.5 percent.
Protect the lowest income groups
Asked if the cuts will be painful, Jakobsdóttir answers in such a way that the government’s top priority, now as before, will be to safeguard the lowest income groups and ensure public service, whether it be in the healthcare system or in the schools.
Jakobsdóttir says that the situation in Iceland is, however, quite good in an international context.
“Our goal in this financial budget, and now, of course, I can’t say much because it will be presented this week and I’m not going to start tipping that debate, but what we’re heading for is that it will be a credible strategy to beat inflation while safeguarding the lowest income groups and safeguarding the public service.”