'Can you at least rule out higher taxes in the autumn statement?' ITV News Economics Editor Joel Hills asks Jeremy Hunt
The UK had the highest rate of inflation in the G7 last year, it has the highest rate of inflation in the G7 this year and we are forecast to have the highest rate of inflation in the G7 next year.
The Chancellor insists our recovery from the economic shocks triggered by the pandemic and Russia’s invasion of Ukraine is “on track” but we’re not out of the woods yet and he concedes that it will be next year at the earliest before the typical household starts to feel their living standards are improving.
The outlook for the public finances also looks challenging.
Economic growth is weak and expected to remain so in the short-term. Tax receipts look strong and borrowing has come in lower than the Office for Budget Responsibility (OBR) expected but the UK’s national debt is rising. Interest rates are above 5% and, if the markets are right, will still be above 5% in a year’s time.
The Chancellor sat down with Joel Hills at the Annual Meetings of the World Bank and International Monetary Fund in Morocco
Speaking to ITV News at the Annual Meetings of the World Bank and International Monetary Fund in Morocco, Jeremy Hunt warned that he would have to make difficult decisions in the Autumn Statement next month.
“I think it looks like the debt interest payments will be £20 to £30 billion higher this year than we predicted (in the Budget in March) because of the fact that, across the world, interest rates have been repriced upwards. So it's going to be challenging.”
The Office for Budget Responsibility has already delivered the first version of its economic and fiscal forecasts to the Treasury.
There will be further iterations to come but the chancellor is already indicating that the headroom he had to meet his self-imposed fiscal rules - of debt falling as a share of GDP in five years time - has vanished.
In the event that there is the need for further restraint, the Chancellor is signalling that he won’t increase taxes and the focus will be on spending cuts.
“I have said very many times now that I want to reduce the tax burden, but the way to do that - there's no shortcut - we have to spend public money more efficiently”.
Pushed to rule out tax rises next month, he added: “I couldn’t have made it clearer. I don't want taxes to go up.”
The clamour within the Chancellor’s party, of course, is for tax cuts but Hunt has already said publicly these will be “virtually impossible” to deliver until the economy recovers.
Earlier this week, the IMF published its latest assessment of the state of the world economy which in many ways was encouraging.
The chancellor told ITV News he faces difficult decisions ahead of his mini budget in a few weeks' time - but what does this mean? Joel Hills explains
The IMF talks now of a “soft-landing” by which it means inflation can be brought under control without triggering a major downturn.
But the outlook for growth is weak in many countries and there’s a lot that could go wrong.
Back in January an independent review commissioned by the government urged it to “go further and faster” to harness the economic benefits of Net Zero.
Since then, the government has permitted new drilling for oil and gas in North Sea and relaxed the UK’s commitments to tackle climate change.
Yesterday, The Climate Change Committee, an independent expert body setup to advise the government, said it is “concerned“ the UK will miss its emissions reduction targets in 2030, and hasn’t seen evidence which supports the government’s reassurance that it will reach Net Zero by 2050.
This morning, the chancellor denied the UK is backsliding. “We are a leader (on Net Zero),” he insisted.
“We have reduced our emissions by more than any other country in the G20. But as we go on this journey, we also need to carry the public with us.”
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