Chancellor sets out growth priorities

Peninsula Team

February 02 2023

Chancellor Jeremy Hunt has outlined plans to boost the UK economy while stressing that tax cuts will not happen until inflation is under control

Speaking at Bloomberg’s European headquarters in London, the Chancellor set out his long-term vision for how the government planned to achieve growth across multiple sectors in the UK.

This was Hunt’s first big economic speech since he took office in October, where he addressed a long-term plan to tackle poor productivity, as well as calling for greater investment in education and technology.

He also dismissed economic ‘gloom’ as he promised to use ‘Brexit freedoms’ to increase growth and productivity in the UK.

In his Autumn Statement last November, Hunt revealed tax rises and spending cuts worth billions of pounds aimed at addressing the nation’s finances, as it continued to face the cost of living crisis.

He defended not cutting taxes, saying reducing inflation was the UK’s primary focus and ruled out any immediate action until the ‘time is right’.

Hunt said: ‘Our plan for this year remains to halve inflation, grow the economy and get debt falling. But all three are essential building blocks for much bigger ambitions for the years beyond.

‘The biggest, quickest tax cut that the prime minister and I can deliver for families up and down the country is to halve the inflation that is eating away at people’s pay. It’s pushing up the price of the weekly shop and is something we can deliver quickly and will help everyone.’

The current rate of inflation was 10.5% in December, down from 10.7% in November and the 41-year high of 11.1% in October.

The current inflation rises in the economy are largely due to supply chain problems linked to Covid-19 and Russia’s invasion of Ukraine, which has exacerbated the cost of energy and all other goods that require energy input.

In relation to economic goals, Hunt spoke about businesses in key growth sectors like digital technology, green industries, advanced manufacturing and the creative industries.

This comes just two months before his Budget statement in which he is expected to announce further measures to help boost the UK’s slow pace of growth.

Intended to bring about a plan ‘energised’ by Brexit, Hunt addressed his aims to increase enterprise, supporting businesses by using new-found Brexit freedoms to review regulations and make it easier for companies to innovate.

He also reiterated the importance of employment and tackling economic inactivity, based on what he called his ‘four pillars’ as a framework to push growth and tackle inequality.

The four pillars were enterprise, education, employment and everywhere, he said. Which were ‘essential for any modern, innovation-led economy’.

Susannah Streeter, senior investment analyst, Hargreaves Lansdown, said: ’The Chancellor donned his hard hat to deliver a dose of realism about the task ahead, underlining that inflation is still the biggest threat to be cut down. Brandishing a blueprint in hand he gestured to the four pillars he hopes will lift the economy. But the detail is sorely lacking, with the architects of this plan clearly unsure how it will be paid for.

‘On one hand he’s promising a low tax economy to incentivise companies to invest, but underlines this can only be done if spending is curtailed. Yet, other pillars – education and employment will require significant new funding to really move the dial on the issues holding back productivity.’

Ahead of his Budget statement in March, some Tory MPs are pushing for him to introduce tax cuts to bring down the high tax burden.

Former leader Sir Iain Duncan Smith said: ‘The government must make it very clear that we believe in lowering the tax, lowering costs, giving people greater choice. That always seems to me to be a positive message to send – rather than saying simply you can’t do tax cuts, that’s a negative.’

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