Jeremy Hunt plays down prospect of tax cuts after Britain’s debt rockets to £16billion

The Chancellor faces an uphill battle

Jeremy Hunt, the Chancellor of the Exchequer, is facing a significant challenge as interest payments on Britain's national debt have skyrocketed to £16 billion. This has resulted in Hunt downplaying the likelihood of tax cuts as he attempts to find ways to balance the books.

Fears of high interest rates derail optimism

According to Treasury insiders, Hunt had been considering £6 billion of headroom for potential giveaways in the upcoming Autumn Statement. However, concerns that interest rates will remain high for several more months have caused borrowing costs to surge since the Budget in March.

A desperate need for additional funding

As a result, Hunt now finds himself in need of an additional £23 billion to cover the increased interest payments. The UK was projected to spend around £110 billion, or a tenth of its total revenue, on servicing debts in 2023. This widening blackhole in the budget makes any hope for tax cuts unaffordable this autumn, forcing the Chancellor to search for alternative savings.

A cautious tone from Hunt

Speaking at the Centre for Policy Studies fringe event during the Tory party conference in Manchester, Hunt admitted that discussions around tax cuts were "slightly academic" at this point. He explained, "We are halfway through our battle with inflation, but also because debt interest payments have increased dramatically in the last six months, I don't think we will be in a position to pursue that." With the spending review just six weeks away, Hunt emphasized the importance of tackling inflation, stating that it affected not just doctors and nurses, but the entire population.

The current situation comes at a time when consultants and junior doctors are participating in a second set of coordinated strikes lasting three days. Mr. Hunt stressed the necessity of reducing inflation, arguing that giving pay rises to healthcare professionals would be counterproductive if inflation continued to rise.