Chancellor Jeremy Hunt has hinted that there will not be any spare money for tax cuts in the autumn statement
In a downbeat assessment that will have disappointed many Tory MPs, the chancellor predicted that taxes were more likely to rise than fall unless the government could find a way to improve growth.
He said “stickier” inflation had pushed up debt interest payments, meaning there would be little money to play with when he made his autumn statement on November 22.
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Hunt told Bloomberg TV: “Our priority is to bring down inflation, and when you’re trying to bring down inflation, you have to be really careful not to pump extra money into the economy, as much as you would like to, not to pump extra money into people’s pockets, because that can push up prices and keep inflation higher for longer.”
Asked whether there was more fiscal headroom than predicted earlier this year, Hunt said: “I think it’s unlikely because since the spring budget, when the last numbers were published, we’ve seen inflation stickier than was forecast at the time and that means that interest payments are higher.”
A Treasury source told the Times: “There’s a detachment here between the politics — ‘we’re trying to work out which taxes to cut’ — and the economics, which is ‘we’re trying to avoid tax rises’.”
Paul Johnson, director of the Institute for Fiscal Studies, has repeatedly said that the ageing population and the government’s desire to increase defence spending after years of cuts would make tax rises more likely in the coming years.
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