Chancellor Jeremy Hunt at the Global Investment Summit (Image: Getty)

       Jeremy Hunt has ditched plans for a 2p cut to income tax at next month’s Budget, reports have suggested.

       The Chancellor was possibly set to reduce the basic rate of income tax from 20 to 18 per cent, as well as looking to slash National Insurance employee contributions by two percentage points as an alternative.

       A Treasury source said: “The world has changed. Everything you thought was going to happen [at the Budget] may not now happen.”

       Britain entered a technical recession on Thursday following two quarters in a row of negative growth.

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       Work and Pensions Secretary Mel Stride warned that high levels of worklessness are part of the reason for the recession.

       Mr Stride said: “The shadow of economic inactivity – people not in work nor looking for it – continues to hang over our nation”.

       He added: “I find it deeply concerning that 2.8 million people are now off sick – missing out on the financial, social and health benefits we know work brings, and denying the engine of growth, our fantastic British businesses, the labour they need.”

       The Chancellor would not be drawn into confirming suggestions that further tax cuts would be announced at the Spring Budget on March 6.

       Mr Hunt said he would not break with convention and speak about the Budget in the weeks preceding it.

       But the Chancellor did hint at his preference for tax cuts, suggesting that countries with “lighter taxes” did “tend to grow faster”.

       He added: “But I would only cut taxes in a way that was responsible, and I certainly wouldn’t do anything that fuelled inflation just when we are starting to have some success in bringing down inflation.”

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