Jeremy Hunt comments on Liz Truss’ mini budget and mistakes made
Tories urged Chancellor Jeremy Hunt to cut taxes as soon as possible after world experts declared Britain was on the “right track” for economic growth. The International Monetary Fund yesterday overturned previously gloomy forecasts by giving the UK the biggest upgrade of any leading nation. It now expects the economy to shrink by 0.3 percent this year – half of the fall previously expected – before growing by one percent in 2024.
The prediction fuelled a tax-cut clamour among Conservatives in the face of speculation Mr Hunt is planning an autumn blitz to put more money in people’s pockets.
MP Sir John Redwood said: “We need tax cuts now, the sooner the better. There is a big real income squeeze underway.
“We also need tax cuts on business investment because the much higher corporation tax rate is doing great damage to future investment plans and hitting new jobs.
“I’ve always thought the Government should take VAT off domestic fuel and I’m against general tax subsidy money-go-round in the energy sector where they offer subsidies and impose extra taxes.”
Senior Tory David Jones said: “The most important thing to do is reduce the level of corporation tax so we encourage more companies to establish themselves in this country. I very much hope that’s going to be on the agenda.”
The TaxPayers’ Alliance said a cut to income tax would be “a light at the end of the tunnel” for people struggling to make ends meet.
Mr Hunt, who will meets counterparts in Washington for talks today, said: “Thanks to the steps we have taken, the Office for Budget Responsibility says the UK will avoid recession and our IMF growth forecasts have been upgraded by more than any other G7 country.
The IMF now say we are on the right track for economic growth. By sticking to the plan we will more than halve inflation this year, easing the pressure on everyone.”
Although the IMF’s World Economic Outlook report expects Britain to have the weakest performance in the G7, it said from 2025 onwards, the nation was on course to grow faster than Germany, France or Italy.
The finance body’s director of research, Pierre-Olivier Gourinchas, said: “The UK economy seems to be doing a little bit worse than some other comparable economies because there is a higher dependence on imported energy with a high share of gas – and with the gas prices we’ve had last year, that’s a major negative trade shock.
“There’s a fairly tight labour market and so there has been a need for fairly aggressive tightening of monetary policy.”
Treasury insiders pointed out the UK had consistently outperformed IMF forecasts for more than five years. The country avoided recession in 2022 and is expected to do the same this year.
Prime Minister Rishi Sunak and Mr Hunt are said to be drawing up plans to cut income tax and raise the national living wage – from £10.42 an hour to possibly £11.16 – before a predicted autumn general election next year.
Mr Hunt will reportedly announce the plans this autumn, ready to take effect next April.
Tories hope an autumn election would allow the plans time to bed in with voters, it is claimed.
But a government source warned reducing inflation and debt were still Mr Sunak’s top priority. The insider added that a penny off income tax would cost about £6billion a year and insisted tackling inflation was the “single best way to put money back into people’s pockets”.
The IMF boost comes as Labour’s lead over the Conservatives has fallen to its narrowest margin since Mr Sunak became PM. Sir Keir Starmer’s party is on 44 percent with the Tories on 30 percent, according to Redfield & Wilton Strategies survey.
Sir John Curtice, a leading pollster, said next autumn was the “most likely” date for the next
He said yesterday: “I’ve long since taken the view that October or November of next year has to be the most likely date.
“By going for as long as possible, the Conservatives maximise their chances that they can achieve a political recovery.”
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