- Written by Christy Cooney and Nick Eardley
- BBC News
Treasury Secretary Jeremy Hunt said it would be “almost impossible” to implement tax cuts until the British economy improves.
A less bleak economic outlook and rising costs of living led to calls for tax-cut measures in the Autumn Statement in November.
Speaking to LBC, Hunt said the country’s high debt levels had left him with some “very difficult decisions”.
UK debt Currently standing 98.8% of GDP, a level not seen since the early 1960s.
With the Conservative Party far behind Labor in the opinion polls, there is debate about what the party can do to regain ground before the general election, expected to be held next May.
A large number of conservative MPs claim that keeping taxes at historically high levels, especially in light of the high cost of living, constitutes a political error.
They want ministers to cut taxes – or at least set out a course for doing so.
The slight fall in inflation – interest rates are rising – last month also meant that the Bank of England kept interest rates at 5.25% after two years of further rises, meaning the cost of national borrowing did not rise as some had expected.
But speaking on Tonight with Andrew Marr, Hunt said the cost of servicing the country’s debt remained higher than when he presented the spring budget in March, meaning there was “no extra room” for tax cuts.
“It makes life very difficult,” he said. “It makes tax cuts practically impossible, and means I will face another set of frankly very difficult decisions.
“All I would say is, if we want to lower long-term debt costs, we have to really stick to this plan to lower inflation, lower interest rates.
“I don’t know when that will happen. But I don’t think it will happen before the autumn statement on November 22, unfortunately.”
It is not surprising that tax cuts are not being considered at the moment, as government insiders have been saying so for months.
But the Treasury is working to prepare voters for another financial event where major commitments are unlikely to be made – as ministers continue to prioritize lowering inflation further.
Figures released on Wednesday showed inflation in August at 6.7%, lower than many had feared but still well above the target level of 2%.
Tax cuts typically increase demand in the economy and could risk prices rising back toward levels seen earlier this year.