“The number one priority now is to bring down inflation and take responsibility for government borrowing, and that is the overriding economic priority of all, and that takes precedence over everything else,” Sunak told reporters on Tuesday when asked if he would rule out tax cuts before. The next general election.
Prime Minister Rishi Sunak speaks to reporters as he heads to the NATO summit in Vilnius, Lithuania.
The prime minister’s comments echo those of finance minister jeremy hunt to financial times In an interview published over the weekend. The newspaper reported that Hunt has ruled out major tax cuts before the election this autumn, and said he would not add billions of pounds to the economy.
But the situation threatens to alienate members of the ruling Conservative Party who have protested the government’s oversight of the highest tax burden in seven decades. With the Conservatives trailing Labor by more than 20 points in recent polls, they are calling for tax cuts to help win over voters ahead of a general election that Sunak must call by January 2025.
However, Sunak staked his fortune on five pledges to voters about the economy, health queues and immigration. Chief among them is a pledge to halve inflation this year – from 10.5% at the end of 2022. That target looks increasingly difficult amid persistent price pressures, with inflation still at 8.7% – more than four times the official target of 2%.
On Tuesday, UK data shows Wages have gone up More than expected added to the sense that inflation is proving difficult to tackle, and continued pressure on the Bank of England to continue raising interest rates.
“Given the context we are facing, we will make sure that inflation is brought down and we will not do anything to make the situation worse or to last longer,” Sunak told reporters on his way to a NATO summit in Vilnius, Lithuania.
Sunak also said inflation is a consideration as the government decides how big wage increases this year should be for public sector workers including nurses and police officers.
He said, “We want to be fair, we want to do things that are affordable for taxpayers and we need to be accountable.” When it comes to financing wage increases, “the chancellor is right to highlight the importance of government borrowing in excess of inflation.”
A final decision on the salaries of these workers is expected in the coming days, but no additional borrowing will be allowed to fund them, three officials familiar with the matter told Bloomberg. One official said the money to pay for the increases should come from existing departmental budgets.
Some Conservatives have urged Sunak and Hunt to commit to tax cuts ahead of three trial by-elections on July 20. Their argument — that lowering the tax burden is crucial to stimulating growth — Sunak finds it hard to dismiss, even as he sticks to his anti-inflationary mantra.
“The chancellor and I are absolutely united on wanting to lower taxes for people: Of course we are – we are conservative,” Sunak said. “We want people to be able to hold more of their own money.” DM