Updated March 3rd, 2024 at 16:37 IST

UK Chancellor Jeremy Hunt worried about economic forecast dip

In an interview with the Sunday Telegraph, Hunt revealed discrepancies between Britain's official budget forecasts and the government's projections.

Reported by: Business Desk
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Economic forecast shift: British Chancellor of the Exchequer Jeremy Hunt has indicated a shift in economic forecasts, expressing concern over a downturn compared to previous expectations. In an interview with the Sunday Telegraph, Hunt disclosed that the forecasts by Britain's official budget watchdog have not aligned favourably with the government's projections. He compared the current outlook to the optimism presented in the Autumn Statement, a budget update issued last November.

Hunt stressed the necessity of prudence in fiscal matters, downplaying speculations surrounding substantial tax cuts ahead of an anticipated national election. Despite internal pressure within the Conservative Party to implement tax reductions, Hunt highlighted the importance of responsible financial management, stating that any tax cuts must not result in heightened public borrowing.

Speaking on Sky News, Hunt reiterated the government's commitment to judicious tax policies, citing the reduction of the National Insurance rate by two pence in the Autumn Statement. He asserted that tax cuts should be pursued responsibly, avoiding any measures that could exacerbate borrowing.

Tax burden rise

While the government had announced tax cuts for businesses and payroll in November, the overall tax burden in the UK has been steadily increasing over the years. It is on track to reach its highest level since World War Two, primarily due to thresholds for various taxes not keeping pace with inflation.

To address these challenges, the finance ministry outlined plans to enhance public sector productivity. This involves leveraging technologies such as artificial intelligence to expedite processes, like health checks using scanners, and deploying technology to allocate police officers to frontline duties more efficiently. These efforts are expected to yield annual benefits worth up to £1.8 billion ($2.3 billion) by 2029.

Hunt stressed the significance of careful spending and productivity enhancements, potentially creating room in the budget for additional tax cuts. The government aims to strike a balance between prudent fiscal management and addressing the nation's financial challenges effectively.

(With Reuters Inputs)

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Published March 3rd, 2024 at 16:37 IST