Precarious tightrope walk back to solid fiscal ground

STRAP in folks – it’s going to be a long and bumpy ride.We’d all like this crisis to be over soon, but it’s clear that’s not going to happen.

Respected think tank the Institute for Fiscal Studies has warned that taxes are going to remain high for decades.Wages, meanwhile, have fallen once inflation is taken into account.

Even house prices, which seemed to be on an inexorable upward trajectory, are expected to come down.

In fairness to Prime Minister Rishi Sunak and Chancellor Jeremy Hunt, they’ve made no attempt to sugar-coat the truth about the difficulties we face.

Mr Hunt has spoken in apocalyptic terms about the financial situation resulting from the Covid pandemic and the global energy price shock, exacerbated by the war in Ukraine. He insists that the nation’s huge debts make it essential to raise taxes in order to start paying them off.

Not every Tory politician agrees. While it’s indisputable the financial situation is very difficult, former Cabinet minister Jacob Rees-Mogg is among those worried about the huge tax burden on the British public and its impact on economic growth.

However, recent events have demonstrated the importance of showing financial markets that there is a plan in place to pay off the nation’s debts.

Mr Hunt has a difficult balancing act to perform as he attempts to maintain financial stability while limiting the pain to taxpayers as much as possible. Nobody should under-estimate the huge challenges facing the Government, and they will take time to overcome.