Chancellor Jeremy Hunt is set to add £25billion in taxes in his November budget placing the highest tax burden on Brits since World War II. The Chancellor is reportedly targeting a 50-50 split between spending cuts and tax hikes, a government source told the Daily Mail. The budget was due to be announced Monday, however, it has been pushed back to November 17 as the Prime Minister and his Chancellor determine how to fill a “massive fiscal black hole” of up to £40billion.
The Prime Minister said on Friday he was working through “difficult decisions” with Chancellor Jeremy Hunt after they were warned economic growth is forecast to drop amid fears of a recession.
A day earlier the pair had a meeting to discuss the budget which was described as “sober”.
Treasury sources declined to put a figure on the savings under consideration but they were believed to be looking for financial headroom of up to £10billion.
This would mean that Chancellor Jeremy Hunt, if targeting a 50-50 spending cut and tax hike split, would need to raise taxes a further £25billion to fill the hole.
Following the former Chancellor Kwasi Kwarteng’s mini-budget and his subsequent sacking, Mr Hunt had already announced tax rises of £32billion to help calm the markets.
This means the burden falling on UK taxpayers will increase by £57billion, on track to reach 36.3 percent of GDP by 2025 and the highest level since the 1940s.
Mr Sunak said he was “confident” they can rectify the “mistakes” of Liz Truss’s leadership, as he focused on bringing down inflation and limiting rises in interest rates.
During a visit to Croydon University Hospital in south London he pledged to keep “fairness at the heart” of the budget.
He said: “The Chancellor has already said of course difficult decisions are going to have to be made and I’m going to sit down and work through those with him.
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“But what I want everyone to know is that we need to do these things so that we can get our borrowing and debt back on a sustainable path.
“That’s important because it means that we can get a grip of inflation. If we do that, it means we can limit as best as possible the increase in interest rates, which is important.
“But as we do that, I want people to be reassured, we will always do it with fairness at heart, we will protect the most vulnerable and ensure that we can continue to grow the economy in the long run.”
The financial figures will likely not be finalized until Mr Sunak and Mr Hunt receive the latest forecasts from the Office for Budget Responsibility, however one Treasury source said the numbers remain “grim”.
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The source said: “Markets have calmed somewhat, but the picture remains grim. After borrowing and spending hundreds of billions of pounds due to Covid-19 and for energy bills support, there is a massive fiscal black hole to fill.
“People should not underestimate the scale of this challenge, or how tough the decisions will have to be. We’ve seen what happens when governments ignore this reality.”
Mr Hunt is said to have met with George Osbourne, the architect of austerity following the 2008 financial crash, on Thursday.
The Chancellor has pledged to get “debt falling over the medium term” and has warned of “very, very difficult decisions” being required on tax and spending.