UK finance minister dampens down hopes of tax cuts
British finance minister Jeremy Hunt on Sunday talked down the likelihood of tax cuts in this week’s budget, pledging “prudent and responsible” measures “for long term growth”. The Chancellor of the Exchequer had been widely expected to cut taxes in Wednesday’s budget, in a move seen as a way of closing the gap on the main opposition Labour Party ahead of elections.
Prime Minister Rishi Sunak’s Conservative Party is trailing in the polls with pollsters predicting that Labour leader Keir Starmer in on track to win the keys to number 10 Downing Street at a general election later this year. Voters, hit by a cost of living crisis, have repeatedly punished the Conservatives in a string of recent by-elections. With the Bank of England’s main interest rate sitting at a 16-year high of 5.25 percent, millions of voters are also suffering from soaring mortgage repayments.
“It’s going to be a prudent and responsible budget for long term growth,” Hunt told Sky News television channel. Official data last month showed Britain had sunk into recession after the economy shrank in the final two quarters of 2023.While economists predicted that the recession could be short-lived, the data has been a big setback for Sunak, who has placed economic growth as a key priority.
But Hunt said he would not cut taxes at the expense of future generations. “I think the most uncon
servative thing I could do would be to cut taxes by increasing borrowing,” he told the BBC.
“Because that’s just cutting taxes and saying that future generations have to pick the tax up,” he added. Although he would not be drawn on tax measures expected in the budget, Hunt did announce an £800 million ($1.01 billion) package of technology reforms designed to make public services more efficient and reduce paperwork. As part of the package, police will use drones to assess incidents such as traffic collisions and artificial intelligence (AI) will be
deployed to speed up the results of cancer scans in the state-run National Health Service. “There is too much waste in the system and we want public servants to get back to doing what matters most: teaching our children, keeping us safe and treating us when we’re sick,” Hunt said in a statement.
According to The Sunday Times, the Office for Budget Responsibility told Hunt on Wednesday that he has £12.8 billion of headroom to play with—more than £2 billion less than the figure the Treasury is said to have previously been basing its calculations on.