Jeremy Hunt, the Chancellor of the Exchequer, recently announced his stance on cutting taxes and investing in growth for the UK economy. In an article for the Daily Express, Hunt expressed his confidence in the country’s economic recovery and outlined his plans to abolish National Insurance contributions (NICs) in the long term.
Hunt highlighted the positive news that the UK’s gross domestic product (GDP) grew by 0.1 percent in February, following a 0.3 percent growth in January. This growth indicates that the economy is bouncing back and on track for recovery after a technical recession. The Chancellor emphasized that the recent positive economic data shows that “Britain is back in business.”
One of the key areas of focus for Hunt is inflation. He pointed out that inflation has been significantly reduced, from over 11 percent to 3.4 percent, and is projected to fall to 2 percent next month. This decrease in inflation is seen as a positive indicator for sustainable economic growth. Hunt believes that as inflation continues to fall, it will release the handbrake holding back growth, leading to increased prosperity for individuals and secure funding for public services.
Hunt defended his decision not to cut taxes earlier, stating that the hard work of reducing inflation will ultimately be worth it. Inflation spiked between 2021 and 2022 due to factors such as pent-up demand during COVID-19 lockdowns and Russia’s invasion of Ukraine. However, Hunt assured the public that he is committed to reducing the tax burden and boosting growth once inflation has been brought under control.
The Chancellor’s ambition is to eventually abolish NICs, which he views as an unfair double tax on work. By doing so, he aims to create a fairer system that benefits individuals and encourages economic growth. Hunt believes that cutting taxes and investing in growth will lead to sustainable economic development and ensure that people feel better off.
The UK’s GDP figures for the beginning of 2024 indicate a stronger economic footing, with the three-month average growth rate rising to 0.2 percent in February. This is the highest reading since August and suggests that the country may be able to avoid recession even if there is a contraction in GDP in March. The positive economic indicators are likely to influence the Bank of England’s decision regarding interest rate cuts, and the central bank expects a slight expansion in the first quarter.
Hunt’s plans to cut NICs and abolish non-dom tax status have been met with mixed reactions. While some view these measures as steps in the right direction, others, such as the Institute for Fiscal Studies (IFS), argue that they will not prevent the tax burden from rising to a record level of 37 percent of GDP by 2028/29.
Overall, Jeremy Hunt’s stance on cutting taxes and investing in growth reflects his confidence in the UK economy’s recovery. He believes that reducing inflation and releasing the handbrake on growth will lead to sustainable economic development and benefit individuals and public services. However, there are differing opinions on the effectiveness of his proposed measures. As the general election approaches, voters will closely scrutinize the Chancellor’s economic plans and their potential impact on their daily lives.
