[1/2]British Prime Minister Rishi Sunak speaks during the opening session of the World Food Security Summit at Lancaster House in London, UK, November 20, 2023. Dan Kitwood/Pool via Reuters Obtaining licensing rights
LONDON, Nov 20 (Reuters) – British Prime Minister Rishi Sunak said his government would cut taxes after inflation fell, ahead of a budget update this week when Finance Minister Jeremy Hunt is expected to announce how he will speed up the recession. Economy.
“Now that inflation has halved and our growth is stronger, meaning revenues are rising, we can begin the next phase and turn our attention to cutting taxes,” Sunak, who is expected to call an election in 2024, said in a speech on Monday. .
Under pressure from within his traditionally low-tax Conservative Party, Sunak said his government needed to prioritize reducing the tax burden, but stressed that he would not repeat the unfunded tax cut plan announced by his predecessor, Liz Truss, last year, which sparked unrest in… Bond markets.
Sunak said the government would reduce taxes over time and would not do anything that would increase inflation.
“You can trust me when I say we can responsibly start cutting taxes,” he said.
Data last week showed inflation fell to 4.6% in October, allowing Sunak to declare he had kept his promise to voters to halve price growth this year even if most of the decline was due to the comparison effect of higher gas prices last year.
Conservative lawmakers have long called for Sunak to cut taxes to help close the gap in opinion polls with the opposition Labor Party ahead of elections expected next year.
Many conservatives are also angry at a series of tax increases introduced by the government to help stabilize public finances after economic shocks caused by the coronavirus pandemic and rising energy prices.
But his promise on Monday may not unite Sunak’s divided party after another of his key pledges – tackling illegal immigration – was shattered by a Supreme Court ruling last week that invalidated a deal to extradite asylum seekers to Rwanda.
In his speech, he sought to fire Labour’s plans to borrow billions of pounds each year to fund Britain’s net investment.
“This is making the same economic mistake as last year’s mini-budget. Spending tens of billions of pounds on unfunded spending is no less dangerous than wasting tens of billions of pounds on unfunded tax cuts,” he said.
Sunak declined to comment on the taxes his government is likely to cut.
He also said that the government would focus on fixing so-called supply-side issues that have affected the economy, the most important of which is the shortage of workers to fill vacant positions.
“At the moment, there are about two million working-age people who are not working at all. This is a national scandal,” Sunak said, adding that he wants to change the country’s benefits system for working-age adults to get more of them into work. .
Sunak said building a sustainable energy grid and a “world-class” education system were two other key elements of his long-term plan for economic growth.
Hunt is due to present the budget update in the autumn statement in a speech to Parliament on Wednesday.
(Reporting by Sarah Young and Alistair Smoot; Writing by William Schomberg and Kylie MacLellan) Editing by Kate Holton and Christina Fincher
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