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Tax cuts are 'virtually impossible' Chancellor tells LBC despite interest rates being held at 5.25%
21 September 2023, 16:53 | Updated: 22 September 2023, 09:50
Jeremy Hunt says even after interest rates being held at 5.25% tax cuts are "impossible"
The UK's long term debt is now higher than it was at the spring budget so - even after the Bank of England's action today - tax cuts are off the table, Jeremy Hunt tells LBC.
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The Bank of England has been hiking interest rates since December 2021 as inflation ran rampant, with surges in the price of energy and food.
But on Thursday, policymakers at the bank paused their recent habit of increasing rates.
"One of the consequences of interest rates being held at 5.25% is that government borrowing is going to be less than it might otherwise have been," Andrew began.
"The Resolution Foundation suggests you are going to be £11 billion better off than you were in March and already people are saying, 'Aha, headroom for tax cuts'."
Jeremy Hunt refuted this suggestion, saying: "I really, really wish it was true but unfortunately it just isn't. If you look at what we are having to pay for our long-term debt, it is higher now than it is at the spring budget. I wish it wasn't it makes life extremely difficult, it makes tax cuts virtually impossible.
"And it means I will have, frankly, another set of very difficult decisions."
The Chancellor also told LBC he believes "we are finally starting to win this battle" against inflation, but "the fight against inflation never happens in a straight line".
"All I would say is that if we do want those long-term debt costs to come down, then we need to stick to this plan to get inflation down," he said.
"To get interest rates down I don't know when that's going to happen but I don't think it's going to happen before the Autumn Statement on November 22nd, alas."