Chancellor Jeremy Hunt has shot down suggestions of tax cuts after a string of economic updates this week, saying they’re “virtually impossible” until there’s more improvement.
Speaking on LBC this morning, the chancellor responded to suggestions that falling inflation and rates being held yesterday, may give headroom to ease the burden on cash-strapped Brits this winter.
This comes after inflation was reported to have fallen this week to 6.7 per cent, while the Bank of England decided to halt its cycle of interest rate hikes to keep it at 5.25 per cent.
Despite the pause in its cycle, averting a 15th straight hike in rates, inflation is still well above the Bank’s two per cent target, and there are suggestions they may go up again in the near future if inflation shoots again.
Interviewed by Andrew Marr on LBC this morning, the presenter told him: “One of the consequences of interest rates being held at 5.25 per cent is that government borrowing is going to be less than it might otherwise have been.”
“The Resolution Foundation suggests you are going to be £11 billion better off than you were in March and already people are saying, ‘Aha, headroom for tax cuts’.”
Shooting down Marr’s suggestions, Hunt responded: “I really, really wish it was true but unfortunately it just isn’t.”
“If you look at what we are having to pay for our long-term debt, it is higher now than it is at the spring budget. I wish it wasn’t it makes life extremely difficult, it makes tax cuts virtually impossible.
“And it means I will have, frankly, another set of very difficult decisions.”
The prediction also said among G20 nations, only Argentina, where inflation is forecast to be over 118 per cent, and Turkey, where it is expected to be over 52 per cent, will have higher levels of price increases.
Saying “we are finally starting to win this battle” against inflation, Hunt insisted the government wasn’t going to be complacent, and the battle “never happens in a straight line”.
“All I would say is that if we do want those long-term debt costs to come down, then we need to stick to this plan to get inflation down,”
“To get interest rates down I don’t know when that’s going to happen but I don’t think it’s going to happen before the Autumn Statement on November 22nd, alas.”