LONDON – Britain’s Treasury chief warned Sunday of a coming spending crunch and tax increases for cash-strapped Britons as he bids to fill the “black hole” in the country’s finances.
Billing himself as a “Scrooge” figure ahead of Thursday’s Autumn Statement, when he will update Parliament on the government’s budget measures, Jeremy Hunt said he was forced to make “very difficult decisions” in his attempt to curb inflation and put the British economy back on an even keel.
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He told British broadcasters that he was determined to make an expected recession as shallow as possible, and warned that everyone could expect to pay more tax.
“I’m a Conservative chancellor and I think I’ve been completely explicit that taxes are going to go up. And that’s a very difficult thing for me to do, because I came into politics to do the exact opposite,” he told the BBC, using his official title, Chancellor of the Exchequer.
Hunt is seeking to make up to 60 billion pounds ($71 billion) in savings and extra revenue in a bid to tighten up public finances and undo some of the damage that economists say was done by his predecessor, Kwasi Kwarteng, and former Prime Minister Liz Truss.
According to the Resolution Foundation, a think tank, Truss and Kwarteng blew 20 billion pounds ($23.7 billion) on unfunded cuts to national insurance taxes and stamp duty taxes on real estate transactions, with a further 10 billion lost to higher interest rates and government borrowing costs.
Britain’s economy, like that of many other countries, is struggling as Russia’s invasion of Ukraine has driven up food and energy costs, pushing consumer price inflation to 40-year highs.
Britain’s economy shrank in the three months to September, official statistics said Friday, as forecasters warned of many months of contraction to come. The Office for National Statistics said gross domestic product fell by 0.2% between July and September, which seemed to signal the start of a long recession.
Earlier this month, the Bank of England rolled out its biggest interest rate increase in three decades, saying the move was needed to beat back stubbornly high inflation. The central bank boosted its key rate by three-quarters of a percentage point to 3%.
Hunt said he would continue his predecessor's pledge to help Britons with soaring energy bills, but added government departments could expect to see cuts.
“I’m Scrooge who’s going to do things that make sure Christmas is never canceled,” he told The Sunday Times.