Jeremy Hunt said the UK Treasury is “unlikely” to have any extra headroom for tax cuts (Image: GETTY)
Jeremy Hunt claims the UK Treasury is “unlikely” to have any extra headroom for tax cuts as “inflation is stickier” than forecasts suggested.
With inflation at 6.8 percent and interest rates at 5.25 percent, the Chancellor says his main priority is bringing these numbers down.
Speaking to Bloomberg TV, he warned he’s taking extra caution to preserve the future of the economy.
Mr Hunt said: “Our priority is to bring down inflation.
“We have to be careful not to pump extra money into the economy and not pump extra money into people’s pockets as it can push up prices and keep inflation higher for longer.
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The priority is to bring down inflation (Image: GETTY)
“Our focus in the Autumn Statement will be on bringing down inflation and delivering the prime ministers goals to half inflation and get it to the two percent target.”
At the March budget, there was ￡6.5 billion ($8.1 billion) to spare against his fiscal rules, the smallest on record.
However again it is “unlikely” there will be any fiscal headroom for the Autumn statement as “inflation is stickier than was forecast” at the time so debt interest payment is higher, he explained.
Mr Hunt stressed that his observations were “speculation” since the final judgment on the fiscal room for manoeuvre will come from the independent Office for Budget Responsibility.
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At the March budget, there was ￡6.5 billion ($8.1 billion) to spare against his fiscal rules (Image: GETTY)
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Rishi Sunak and Jeremy Hunt remain under intense pressure from their own MPs to cut taxes in March, in the run-up to the next election.
However, Paul Johnson, director of the Institute for Fiscal Studies made a plea for honesty from both main parties as such a cut would be a “political and not an economic decision” that came with risks.
Commenting on his statements, Mr Hunt said: “He is right. If we don’t change course, we are going to see taxes going up. To change course we have to increase growth.
“How do you increase growth? A few things. First of all, you make it easier for businesses to recruit the workers they need so they don’t have to put up salaries and put up their prices.
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“Secondly, you have to get inflation under control. And thirdly, you have to boost business investment.”
The UK economy is “making progress” as inflation now sits at 6.8 percent from 11 percent.
However he believes the economy is resilient but the long-term future depends on getting inflation down.
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