London: Jeremy Hunt said he couldn’t promise UK tax cuts ahead of a general election that’s likely to be held next year, despite calls from within his own Conservative Party to do so.
The UK’s “overwhelming priority” is to reduce inflation, the Chancellor of the Exchequer told the British Chambers of Commerce’s annual conference in London on Wednesday. He added that the country is on a path to achieve that, as well as to get interest rates back on a downward trajectory.
“We aren’t in a position to know whether we’re going to have any headroom at all” for tax cuts, Hunt said. “We have to get our taxes down, particularly our business taxes down, but the worst tax of all is inflation.”
Prime Minister Rishi Sunak has just over a year and a half at most to turn around the electoral prospects of the ruling Conservative Party, which for months has trailed the Labour opposition by a double-digit margin in national polling. In the wake of a poor set of local election results earlier this month, he’s under growing pressure from his own backbenchers to cut Britain’s tax burden to lure voters.
Hunt said he and Sunak are instead focused on maintaining the UK’s credibility with financial markets, and want to avoid stoking inflation, which would lead to higher interest rates and borrowing costs. He also suggested that when it comes to tax cuts, the priority will be on reducing business taxes. He also said that in an effort to boost investment, he wants to make permanent the full-expensing policy - where businesses can deduct capital expenditure spending from their taxable profits. That policy is currently set to expire in April 2026.