British finance minister Jeremy Hunt announced on Sunday his reluctance to implement tax cuts that might exacerbate inflation, just days before the Autumn Statement scheduled for Wednesday. The statement is anticipated to unveil targeted tax reductions aimed at revitalizing the UK’s economy and bolstering the ruling Conservative party’s electoral prospects.
In an interview with Sky News, Hunt stated, “We do want to bring down the tax burden, but we will only do so responsibly. The one thing we won’t do is any kind of tax cut that fuels inflation.”
Acknowledging the need to boost growth, Hunt expressed optimism about the recent positive turn in the British economy. He noted, “I will be doing everything that I can possibly think of to boost growth.”
Hunt’s commitment to avoid tax cuts that could worsen inflation aligns with Prime Minister Rishi Sunak’s target of halving inflation over 2023. The recent dip in annual inflation to 4.6% in October, from the previous month’s 6.7%, adds credence to the government’s economic strategy.
The Chancellor faces a complex fiscal landscape with limited options for tax adjustments, owing to substantial state spending during the COVID-19 pandemic and the surge in energy prices last year. Public debt now stands at around 100% of economic output, presenting a stark contrast to its size two decades ago.
While official forecasts expected on Wednesday may indicate some room for fiscal maneuvering without violating rules, Hunt stressed the importance of managing expectations. “If we’re going to be a dynamic, thriving, energetic, fizzing economy, we need to have a lower tax burden,” he emphasized, underscoring the necessity of spending public money more efficiently.
The fate of potential inheritance tax cuts, as reported by the Sunday Times, remains uncertain. Hunt clarified that “everything is on the table.” Labour’s finance spokesperson, Rachel Reeves, weighed in, cautioning against prioritizing inheritance tax cuts during a cost-of-living crisis. She advocated for transparent explanations of funding sources if the government decides to lower taxes on working people.
Photo(reuters)
By: Montel Kamau
Serrari Financial Analyst
19th November, 2023
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