Should Jeremy Hunt raise taxes and cut public spending?
Jeremy Hunt announces changes to measures from mini-budget
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Prime Minister Rishi Sunak kept Jeremy Hunt as his Chancellor in an effort to stabilise the economy and reassure the markets following weeks of economic turmoil. Mr Hunt is expected to deliver tough financial measures to achieve this but should he raise taxes and cut public spending? Vote in our poll.
Mr Hunt was appointed on October 14 by former Prime Minister Liz Truss in a bid to save the economy after former Chancellor Kwasi Kwarteng’s mini-budget plummeted the pound and increased borrowing costs.
Following a series of U-turns, Mr Hunt had planned to announce the nation’s new medium-term fiscal plan on October 31. But it has been delayed by over two weeks, and will be delivered as a full autumn statement.
He said he had recommended postponing it to Mr Sunak to ensure decisions are based on “accurate economic forecasts”.
He explained: “Our number one priority is economic stability and restoring confidence that the United Kingdom is a country that pays its way. But it is also extremely important the statement is based on the most accurate possible economic forecasts and forecasts of public finances.”
The Budget will set out the Government’s intentions on handling public finances and further delays could increase economic uncertainty.
Unlike the mini-budget, Mr Hunt’s measures will be scrutinised by the Office for Budget Responsibility (OBR) which will independently publish its analysis. The OBR has warned that the Government needs to find £40billion in savings to balance the nation’s finances.
The delay could be detrimental to the economy as the Bank of England is due to announce plans for further changes to interest rates on November 3.
Mr Kwarteng had originally planned to deliver the medium-term fiscal reforms on November 23 but the date was brought forward to Halloween following the market’s reaction to the mini-budget at the end of September.
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On Tuesday, Mr Sunak indicated that he would govern based on the 2019 Conservative Party manifesto which ruled out tax rises and pledged to uphold the state pension triple lock. However, newly-appointed Foreign Secretary James Cleverly suggested that there may be some changes to this.
Mr Cleverly told Sky News on Wednesday: “You can’t set out a manifesto and assume that nothing significant is going to happen in the four or five years of a parliament. There was no global pandemic in the 2019 manifesto. There was no invasion of Ukraine in the 2019 manifesto. We have got to respond to the world as we find it, not the one we wish it to be.”
The head of the Confederation of British Industry Tony Danker has warned against pursuing an austerity “doom loop” of cuts to public spending and tax rises. He claimed that extreme pubic spending cuts could undermine the Government’s growth plans.
He said: “If all there is tax rises and spending cuts, and there is nothing in there about growth, the country could end up in a similar doom loop where all you have to do is keep coming back every year to find more tax rises and more spending cuts because you’ve got no growth.”
So what do YOU think? Should Mr Hunt raise taxes and cut public spending? Vote in our poll and leave your thoughts in the comment section below.
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