There is “unlikely” going to be money in the Budget for any “substantial” tax cuts, according to Jeremy Hunt.
Some members of the chancellor’s party have recently pushed for tax reductions to boost the UK economy.
However, Mr Hunt asserted that a commitment to decreasing inflation in half “is the best tax cut right now.”
He acknowledged that the UK was going through “a difficult patch,” but he was adamant that the nation could “get through it and we could get to the other side.”
Mr Hunt unveiled a strategy to boost the UK’s economic growth on Friday.
Following a tumultuous fall when financial markets increased the cost of borrowing for the nation, Mr Hunt declared he was determined to prove that the UK was at fault.
Specifically, he argued, it means “showing the world, showing the markets that we are a responsible nation, that we can pay our way, and that we can balance our accounts.”
At the March Budget, he continued, “it is unlikely that we would have the room for any big tax cuts.”
The disparity between government spending and tax revenue, or government borrowing, increased to a record £27.4 billion in December.
The amount was the highest for that particular month since 1993.
The cost of assisting individuals and businesses with rising energy costs was a driving force behind borrowing. Additionally, higher inflation increased the cost of interest on government debt.
Although the rate of price increases, or inflation, has started to slow down, it is still quite high at 10.5%.
Prime Minister Rishi Sunak pledges to halve inflation by the end of the year.
However, due to declining commodity prices and shipping costs toward the end of last year, several analysts have predicted that prices will start to decline spontaneously without the help of government measures. In the second half of 2023, it is also anticipated that energy prices will decline.
The biggest tax break we can give the British people, according to Mr Hunt, is to half inflation. This will prevent the value of their weekly grocery bill from rising and their paycheck from depreciating.
A strategy to expand the UK economy was also announced by the chancellor, but it was met with mixed reviews, with some business groups criticizing its lack of specificity.
He declared that the “four Es” of entrepreneurship, education, employment, and everywhere would be the main focuses of the approach.
Although it was not a sequence of actions or declarations, he said that it would offer “the framework against which specific initiatives will be examined and advanced.”
But after Mr Hunt failed to release any specific plans, the Institute of Directors (IoD) proposed he adds a fifth E for “empty”.
Business leaders required “government action to counteract the gloomy atmosphere,” according to IoD Chief Economist Kitty Ussher. Examples include maintaining the capital investment super-deduction and introducing tax credits for enterprises that make investments in talent shortage areas.
According to Mr Hunt, the government has plans to boost growth in a number of areas across the UK, including advanced manufacturing, the creative industries, green industries, life sciences, and digital technology.
The TUC referred to the absence of a mention of public sector pay as the “elephant in the room” in the address.
“The warnings of greater constraint from the chancellor will cause great concern among public employees. We are aware that normally means cuts “Paul Nowak, general secretary of the union, remarked.
The contents of Mr Hunt’s speech, according to Craig Beaumont of the Federation of Small Businesses, had “all the right ingredients,” but he cautioned that “the test will be in the pudding in the years ahead.”
“Uncertainty for business”
The founder of the robotics company Tharsus in Blyth, Northumberland, Brian Palmer, stated that while the “themes” being discussed by the government were significant, businesses “need to see the specifics.”
“A well-defined long-term strategy is lacking. Businesses cannot support it and cannot have faith in the government’s ability to implement the policies without that long-term plan.”
Brian cautioned that some businesses were already holding back on investment due to a lack of trust. His company produces high-tech equipment for businesses like Ocado.
He continued, “The government needs to provide companies with a clear understanding of what the playing field will look like moving forward.
Many have seen Mr Hunt’s speech as an effort to address accusations that the administration lacks a long-term growth strategy.
This week, automakers explained that concept. The Society of Motor Manufacturers and Traders (SMMT) said on Thursday that the number of new cars made in the UK has dropped to its lowest level in 66 years. The SMMT warned that the UK was falling behind other nations, particularly when it came to providing state aid to manufacturers.
Make UK, which speaks for the manufacturing sector, stated that the absence of an industrial policy had resulted in “some extremely detrimental big picture issues that are having an impact on some of our core industries.”
Mr Hunt stated that he wanted to address low productivity and claimed that the UK’s exit from the EU will promote risk-taking and regulatory change.
When considering the big picture, Mr Hunt claimed that “declinism about Britain” was incorrect and commended “British intellect and British hard work.”
He claimed that some of the doom was based on numbers that did not accurately portray the situation.
However, Sarah Olney of the Liberal Democrats remarked that Jeremy Hunt’s speech was “cold comfort” for families and retirees who were experiencing unaffordable price increases.
“13 years of Tory economic failure have left living standards and growth on the floor, destroyed our economy, and drove up mortgages and bills,” claimed Rachel Reeves, shadow chancellor for Labour.
She said, “The Tories have no plan for the now and no plan for the future.”