Jeremy Hunt is preparing to unveil his long-awaited Autumn Statement next week as he looks to fill a £50bn black hole in the nation’s finances.
The chancellor has said decisions of “eye-watering difficulty” would have to be taken to reduce government debt and calm the markets, after the chaos unleashed by Kwasi Kwarteng’s mini-Budget in late September.
Adding to the sense of crisis engulfing the UK economy, the Bank of England raised interest rates for the eighth consecutive time last week and warned that the country is facing its longest recession for a century.
With everything from the pensions triple lock to huge spending cuts expected to be on the table, The Sun said the “highly anticipated” fiscal event “will have a massive effect on Brits, especially as the cost of living crisis continues to crunch household finances”.
So what could be in store next Thursday?
The Financial Times reported that “Hunt is preparing a huge budgetary tightening on the same scale as his predecessor George Osborne’s austerity Budget of 2010”.
While the final spending cuts total will reflect daily changes in gilt markets, the paper said the chancellor intends to cut £33bn from public spending, “which would imply tight restraints on departmental spending”.
The Guardian’s economics editor Larry Elliott said the “austerity” option “would require cuts in day-to-day spending for departments other than health and defence of 9%. That’s on top of the real-terms fall in departmental spending caused by higher inflation.”
Prime Minister Rishi Sunak has vowed to protect only one area of spending, the NHS, meaning other departments like welfare, education and defence could face much deeper cuts.
The government has already indicated it will also look to cut planned investments such as the HS2 rail project. Cutting capital spending might raise £10bn, but paring back public investment would be the “anti-growth” option, according to the Resolution Foundation.
Money Week warned that wages will suffer too. “The spending squeeze could also mean below-inflation pay deals for public sector workers like teachers, civil servants, police and social workers.”
The FT said most of Hunt’s revenue-raising measures will be so-called “stealth taxes” …read more
Source:: The Week – All news