In anticipation of what could be the government’s final Budget before the general election, Prime Minister Rishi Sunak asserted that the UK economy is on the right track.
This statement comes amid preparations for Chancellor Jeremy Hunt’s Budget announcement, where tax cuts are expected to feature prominently while maintaining a cautious approach.
Sunak made these remarks during a visit to a former Honda car factory in Swindon, which is being transformed into a logistics hub, citing it as a vote of confidence in the UK economy. He emphasized the government’s commitment to fostering an environment conducive to investment and business growth, particularly in sectors focusing on cutting-edge technologies and manufacturing.
However, experts have expressed skepticism about the extent to which Sunak and Hunt will be able to provide support to households and businesses in the Budget. The Office for Budget Responsibility (OBR) had previously estimated a fiscal headroom of around £30 billion for the chancellor, but changing economic conditions have impacted this projection.
Furthermore, recent official figures have confirmed that the UK entered a recession at the end of last year, although Bank of England Governor Andrew Bailey suggested that the recession may have already ended. Despite this, many households are facing challenges due to high tax rates and increased mortgage costs.
Amidst these economic considerations, Chancellor Hunt is under pressure to unveil measures that could appeal to voters ahead of a potential election. While Sunak reiterated his commitment to moving towards a lower-tax economy responsibly, the specifics of the tax cuts to be announced remain unclear.
In response to reports suggesting tension between Sunak and Hunt, Downing Street denied any rift, affirming that the chancellor is working closely with the prime minister to deliver the government’s economic plan. There were also refutations of claims that Sunak was frustrated with Hunt’s approach and described him as “timid”.
As anticipation builds for Wednesday’s Budget announcement, the focus remains on how the government plans to navigate economic challenges while delivering on its promises to voters.