Jeremy Hunt dampens tax cut hopes as borrowing hits record high

Jeremy Hunt dampens tax cut hopes as borrowing hits record high

Chancellor Jeremy Hunt has dampened Tory hopes of tax cuts on his forthcoming budget as the latest government figures show Treasury bonds hit another record high last month.

Mr Hunt vowed to stick to the “tough decisions” needed to balance the books as the rising cost of energy support programs and rising debt rates drove borrowing to a December record.

The chancellor is reportedly preparing to disappoint frustrated Tory MPs who backed the Truss government’s plan for radical tax cuts with a “lean” budget in March.

The Office for National Statistics (ONS) said government borrowing was a far higher-than-expected $27.4 billion last month.

The official figures showed that borrowing from energy support programs increased by nearly 7 billion bill support payments.

Mr Hunt said the government was making “tough decisions to reduce debt,” adding: “Right now we’re helping millions of families with the cost of living, but we also need to make sure our debt is fair for future generations.”

The Chancellor added: “We have already taken some difficult decisions to reduce debt and it is important that we stick to this plan so that we can halve inflation this year and restart growth.”

Interest payments on government debt rose from $8.7 billion year-over-year last month.

In the financial year to December, government debt rates rose to £87.8 billion and Britain’s financial regulator, the Office for Budget Responsibility (OBR), estimates they will rise to £115.7 billion by the end of the full year in March.

The government is paying a heavy price for the energy price guarantee scheme, which was put in place to help households deal with painful gas and electricity bills by capping the annual bill at £2,500.

Support becomes less generous as the cap increases to £3,000 in April. Similar aid will be offered to companies, but this will also be significantly reduced from the end of March.

The government is also paying households £400 each for six months to help with bills. The cost of this is in addition to the impact of inflation, which has hit more than 40-year highs on the back of the energy and livelihood crises, as a large chunk of public sector net debt goes into the RPI.

Public sector debt reached £2.5 trillion, or about 99.5 per cent of gross domestic product (GDP), at the end of December 2022, according to the ONS, a level last seen in the early 1960s.

But Samuel Tombs of Pantheon Macroeconomics said the pressure on the country’s ailing public finances should ease as falling wholesale energy prices make the energy bill guarantee less expensive.

The government is reportedly considering raising the retirement age from 67 to 68 by 2046, before the late 2030s.

Treasury Department officials are said to want to roll out the change as early as 2035, they said The sun. But Work and Pensions Secretary Mel Stride is reportedly pushing for 2042 because life expectancy hasn’t increased.

Mr Hunt and Rishi Sunak have been warned that they are “playing with fire” if the change comes before the next general election, even though it would raise billions for the nation’s struggling finances.

Leave a Reply

Your email address will not be published. Required fields are marked *