UK must raise taxes and cut spending, says Hunt ahead of budget

Jeremy Hunt arrives at his home in London after being appointed Finance Minister following the resignation of Kwasi Kwarteng. Date taken: Friday, October 14, 2022.

Aaron Chown | Picture Pa | beautiful pictures

Finance Secretary Jeremy Hunt said he would unveil a plan to raise taxes and cut spending this week to show Britain can repair its public finances and restore economic credibility after market turmoil. finance caused by former prime minister Liz Truss.

However, he said that poorer households would be spared much of the pain and cuts to public services would be balanced.

Speaking ahead of the announcement of the budget plan on Thursday, Hunt said he did not want to exacerbate the projected recession but he had to show he could reduce the budget deficit, which has skyrocketed after the pandemic. Covid-19 and Russia’s invasion of Ukraine.

“You don’t want to do things that make any recession you might be in,” Hunt told Sky News on Sunday.

“But on the other hand, if you don’t do anything, if you don’t show that we’re going to reduce debt… then interest rates will be higher and you’ll have a worse recession.”

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After the bond market was hit by a string of non-refundable tax cuts in Truss’ “small budget” in September, Hunt and Chancellor Rishi Sunak warned they would make tough decisions in the coming months. at a time when 10% inflation is weighing heavily on households.

“I’m afraid we’ll all have to pay a little more tax,” Hunt said.

“We’re going to ask people to make sacrifices but … we need to realize that you can only ask so much from the lowest earners.”

The Sunday Times said Hunt planned to tackle a £55bn loss in the UK budget by freezing income tax, national insurance, inheritance and pension tax thresholds and allowances for another two years.

He also intends to halve the tax-free allowance on capital gains and lower the top income tax threshold to £125,000 a year from £150,000.

Many lawmakers in his ruling Conservative party oppose higher taxes, and the large increases could revive tensions within the party.

Asked about spending cuts, Hunt said a strong economy needs good public services and the cuts would be made in a “balanced way”.

Labor finance spokeswoman Rachel Reeves says austerity is not the right approach.

“I’m debating two things: both options that are more tax-fair, but just as important a growth plan,” she told Sky News.

Labor market restrictions

Hunt said he would address labor market problems that have resulted in severe labor shortages for companies.

Pressing on whether Brexit was the reason Britain was the only G7 economy to recover to its pre-pandemic scale, Hunt told the BBC: “I don’t think that’s the biggest issue… it has more to do with other factors in the labor market.”

He also said he would draw up a long-term energy plan after Russia’s invasion of Ukraine led to soaring gas prices, forcing the government to spend tens of billions of pounds to protect households from the surge. worst price.

Hunt said it is “very important” that the government has supported households with a six-month cap on energy bills that expires in April, but unlimited support will not be sustainable.

The Sunday Times says Hunt is likely to commit to a £20 billion extension over another six months, a third of the estimated £60 billion cost in the first six months, meaning bills are likely to get a raise.

On Saturday, sources said Hunt was considering a surprise tax hike on oil and gas companies and expanding it to power-generating companies.


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