Hard times ahead for British taxpayer

There were few announcements in the Chancellor’s Autumn Statement that had not been trailed, but familiarity with the contents did not make them any more palatable. Jeremy Hunt set out to reassure the markets of the Government’s commitment to prudent management of the national finances after confidence was shot by his predecessor’s disastrous mini-budget.

To do so, he announced tax rises and spending cuts amounting to £55 billion. The market reaction was muted, which is precisely what Mr Hunt hoped for.

Re-establishing the UK’S fiscal bona fides among international lenders is critical to reducing the cost of borrowing, even if further interest rate rises are inevitable as the era of cheap debt comes to an end. Mr Hunt said his was a ‘‘balanced strategy’’ and, indeed, the pain was spread almost equally between tax and spending.

This year will see the sharpest fall in living standards on record, while the tax burden rises to its highest level as a share of GDP in decades.

Mr Hunt unquestionably had a difficult hand to play: the cost of the pandemic, the Ukraine war and the mistakes of his predecessor meant a painful retrenchment was inevitable. He has stabilised the patient. But some drastic surgery is still needed.