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Jeremy Hunt will promise to weather an economic “storm” by raising taxes, cutting public spending and scaling back energy support to fill a £54bn black hole in the nation’s finances.

The chancellor will insist to MPs on Thursday that his autumn statement puts the UK on a “balanced path to stability” as he tackles the “enemy” of inflation, which has soared to a 41-year high.

But the measures could put him on a collision course with Tory MPs on the right of his party who are already voicing anger about the prospect of some of the plans.

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An 11th hour petition from two dozen Tory MPs, led by Jonathan Gullis, has been sent to the chancellor asking him not to hike fuel duty in the statement.

The package will be in the form of £30bn of spending cuts and £24bn in tax rises over the next five years – a stark contrast to Kwasi Kwarteng’s unfunded tax-slashing spending splurge two months ago.

Among the measures, annual energy bills for a typical household will stay capped at £2,500, but this will rise to £3,000 in April 2023, when support will become more targeted with additional payments for low-income households and pensioners, Sky’s political editor Beth Rigby understands.

More on Jeremy Hunt

On tax rises, those with the broadest shoulders will bear most of the burden, but there will be pain all around.

The chancellor is expected to lower the threshold for paying the highest rate of tax to £125,000 – down from the existing £150,000.

This is a marked difference to Liz Truss’s plans to scrap the 45p rate altogether, giving the highest earners an average tax cut of £10,000.

Analysis says lowering the threshold will bring an extra 246,000 people into the highest bracket at a cost to them of around £580 each a year, which in turn would raise the Treasury £1.3bn a year.

Mr Hunt is also expected to announce a freeze on personal income tax and national insurance tax thresholds lasting until 2028.

Sometimes referred to as a “stealth tax”, freezing tax thresholds drags more earners into paying higher rates of tax.

Mr Hunt has already hinted he will make it easier for local authorities to increase council tax, with reports suggesting the threshold for raising bills without a referendum could increase from 2.99% to 5%.

There is also expected to be a big increase in the windfall tax on energy companies, and a new tax on electricity generators.

Labour has previously said a windfall tax extension could raise an additional £50bn, and criticised what it calls the “loophole” that allows gas and oil firms to offset their tax liability if they invest back into the UK.

On spending cuts, departments are expected to be told to live within an envelope of the March Spending Review, when inflation at was 3%.

With inflation now at 11.1%, that amounts to a real-terms cut across the board, meaning tough choices will be necessary.

However, there will be some exceptions, with the NHS expected to get more money.

There is also likely to be some protection for the schools budget, Sky’s deputy political editor Sam Coates understands.

“There will inevitably be some good news after the weeks of doom-laden warnings,” he said.

Mr Sunak and Mr Hunt have spent weeks warning that tough choices lay ahead.

However, the prime minister told Sky News on Tuesday that “fairness and compassion” will be at the heart of his decisions.

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Rishi Sunak refuses to apologise for the economic turmoil Liz Truss’s short-lived government caused for the UK

It is understood the chancellor will keep the triple lock for pensioners in his autumn statement – honouring a manifesto commitment.

He is also expected to uprate benefits in line with inflation, rather than earnings (a controversial move that would have saved £5bn).

The government has not confirmed what measures will be in the statement, but there has been a constant stream of measures reportedly being considered.

This “pitch rolling” helps markets get an idea of what is coming down the road and avoids spooking traders.

When Ms Truss and Mr Kwarteng made several surprise announcements in their mini-budget in September, it contributed to the financial chaos which saw the pound crash and the Bank of England forced to intervene to prevent pension funds from collapsing.

Read More:
How could PM Rishi Sunak and Chancellor Jeremy Hunt reduce ‘financial black hole’?

Analysis released on Monday by the independent Resolution Foundation think tank found the mistakes they made cost the UK £30bn, doubling the sum the Treasury says will have to be raised.

Mr Hunt will say that his “difficult decisions” are necessary to keep mortgage rates low and tackle the rocketing energy and food prices intensifying the cost of living crisis.

“Families across Britain make sacrifices every day to live within their means, and so too must governments because the United Kingdom will always pay its way,” he is expected to say.

But Tories on the right of the Conservative Party are already voicing anger about the prospect of raising taxes.

Among the Tory critics, former cabinet minister Esther McVey has warned she will not support tax rises without the scrapping of the “unnecessary vanity project” of HS2.

Former business secretary Jacob Rees-Mogg told ITV’s Peston he would vote for the budget so as to not bring the government down, but warned he opposes tax increases, which he believes “risks making a recession worse”.

Labour has also warned that Britain is “falling behind on the global stage”.

Shadow chancellor Rachel Reeves said: “The country is being held back by 12 years of Tory economic failure and wasted opportunities and working people are paying the price.

“What Britain needs in the autumn statement are fairer choices for working people, and a proper plan for growth.”

And Sharon Graham, the general secretary of the Unite union, warned Mr Hunt “workers are ready to take a stand”.

“He can choose to inject investment into the NHS and deliver a fair pay deal – or he can leave it as it is today, in danger of fatal collapse,” she said.

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Rohingya refugees in Bangladesh being forced to fight for same military accused of genocide against their people

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Rohingya refugees in Bangladesh being forced to fight for same military accused of genocide against their people

Cox’s Bazar in Bangladesh is a sprawling mass of humanity. 

It’s a sea of makeshift bamboo shelters, home to more than one million Rohingya refugees – a mainly Muslim minority from Rakhine state in Myanmar.

Some 700,000 fled their homeland back in 2017 – after the Myanmar military massacred thousands.

The army was accused of genocide by the United Nations.

The Rohingya refugees didn’t escape danger though.

Right now, violence is at its worst levels in the camps since 2017 and Rohingya people face a particularly cruel new threat – they’re being forced back to fight for the same Myanmar military accused of trying to wipe out their people.

A child at the refugee camp in Cox's Bazar
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A child at the refugee camp in Cox’s Bazar

Militant groups are recruiting Rohingya men in the camps, some at gunpoint, and taking them back to Myanmar to fight for a force that’s losing ground.

More on Rohingyas

Jaker is just 19.

We’ve changed his name to protect his identity.

He says he was abducted at gunpoint last year by a group of nine men in Cox’s.

They tied his hands with rope he says and took him to the border where he was taken by boat with three other men to fight for the Myanmar military.

“It was heartbreaking,” he told me. “They targeted poor children. The children of wealthy families only avoided it by paying money.”

And he says the impact has been deadly.

“Many of our Rohingya boys, who were taken by force from the camps, were killed in battle.”

Jaker speaks to Sky's Cordelia Lynch
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Jaker speaks to Sky’s Cordelia Lynch

An aerial view of the refugee camp in Cox's Bazar
Image:
An aerial view of the refugee camp in Cox’s Bazar

The situation in Cox’s is desperate.

People are disillusioned by poverty, violence and the plight of their own people and the civil war they ran from is getting worse.

In Rakhine, just across the border, there’s been a big shift in dynamics.

The Arakan Army (AA), an ethnic armed group has all but taken control of the state from the ruling military junta.

Both the military and the AA are accused of committing atrocities against Rohingya Muslims.

And whilst some Rohingya claim they’re being forced into the fray – dragged back to Myanmar from Bangladesh, others are willing to go.

Read more from Sky News:
Bangladesh leader reacts to ‘House of Mirrors’ prison
Inside Bangladesh’s ‘death squad’ jails

Sri Lanka rescues more than 100 people believed to be Rohingya refugees

Teknaf in Cox's Bazar - where refugees arrive from Myanmar after crossing the Naf River
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Teknaf in Cox’s Bazar – where refugees arrive from Myanmar after crossing the Naf River

Some are so aggrieved with the AA, they’re willing to support their former persecutors.

Abu Zar is one of those willing to take up arms.

But not for the military or AA, he says.

Everyone praying in the mosque with him is prepared to go back to protect their own cause he says – not anyone else’s.

“We want to fight for our rights because we have been demanding justice for a long time. But the situation has become unbearable,” he tells me.

Abu Zar has said he is willing to take up arms for his own cause
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Abu Zar has said he is willing to take up arms for his own cause

It’s estimated between 3,000 and 5,000 Rohingya have joined armed groups from this camp.

But the fight they are joining has become increasingly bloody.

In a cramped shelter, we meet Safura.

Safura came under fire as she fled Myanmar
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Safura came under fire as she fled Myanmar

Safura's son Aman had his foot blown off
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Safura’s son Aman had his foot blown off

Five days ago she managed to get out of Myanmar but she had to be carried part of the way.

Her legs are riddled with bullet wounds and the pain is severe.

Her son, Aman, who lies on the floor next to her, has had his foot blown off.

They were injured she said, during an attack on her family home in the middle of the night.

“They entered our house and shot all my family members. My husband and mother-in-law were killed on the spot.”

The military denies forcing Rohingya to the battlefield. But the camps tell a different story- one of surging violence and vulnerability.

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Trump tells Gazans ‘you are dead’ if Israeli hostages are not immediately handed over

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Trump tells Gazans 'you are dead' if Israeli hostages are not immediately handed over

US President Donald Trump has told Gazans to hand over Israeli hostages or “you are dead”.

The threat, made over social media, came hours after the White House confirmed that US officials had broken with tradition to hold direct talks with Hamas.

The US has previously avoided direct contact with the group owing to Washington’s longstanding position not to negotiate with terrorists – with Hamas having been designated as a terrorist group in the US since 1997.

In a press conference on Wednesday, White House press secretary Ms Keavitt said there had been “ongoing talks and discussions” between the US officials and Hamas.

President Donald Trump addresses a joint session of Congress. Pic: AP
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File pic: AP

But she would not be drawn on the substance of the talks – taking place in Doha, Qatar – between US officials and Hamas, but said Israel had been consulted.

Ms Leavitt continued: “Dialogue and talking to people around the world to do what’s in the best interest of the American people, is something that the president has proven is what he believes is a good faith, effort to do what’s right for the American people.”

There are “American lives at stake,” she added.

Adam Boehler, Mr Trump’s pick to be special envoy for hostage affairs, participated in the direct talks with Hamas.

A spokesperson for Benjamin Netanyahu’s office said Israel had “expressed to the United States its position regarding direct talks with Hamas”.

Hours later, Mr Trump warned Hamas to hand over Israeli hostages or “it’s over for you” – adding: “This is your last warning”.

Hamas militants on the day of a hostage handover in Gaza. Pic: Reuters
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Hamas militants on the day of a hostage handover in Gaza in February. Pic: Reuters

On his Truth Social platform, Mr Trump wrote: “Release all of the hostages now, not later, and immediately return all of the dead bodies of the people you murdered or it is over for you.

“Only sick and twisted people keep bodies and you are sick and twisted. I am sending Israel everything it needs to finish the job, not a single Hamas member will be safe if you don’t do as I say.”

Mr Trump met with freed Israeli hostages on Wednesday, something he referenced in his social media post, before adding: “This is your last warning. For the leadership of Hamas, now is the time to leave Gaza, while you still have a chance.

“Also, to the people of Gaza, a beautiful future awaits, but not if you hold hostages. If you do, you are dead. Make a smart decision. Release the hostages now, or there will be hell to pay later.”

Israel estimates about 24 living hostages, including American citizen Edan Alexander, and the bodies of at least 35 others, are still believed to be in Gaza.

Donald Trump welcomes Benjamin Netanyahu to the White House. Pic: Reuters
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Donald Trump with Benjamin Netanyahu in February. Pic: Reuters

The US has a long-held policy of not negotiating with terrorists – which it is breaking with these talks as Hamas has been designated a foreign terrorist organisation by the US government’s National Counterterrorism Center since 1997.

The discussions come as a fragile Israel-Hamas ceasefire continues to hold, but its future is uncertain.

Palestinians walk among the rubble of buildings, amid a ceasefire between Israel and Hamas, in Khan Younis, in the southern Gaza Strip, February 27, 2025. REUTERS/Ramadan Abed
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Palestinians amid the rubble in the southern Gaza strip. Pic: Reuters

Mr Trump has signalled he has no intention of pushing the Israeli prime minister away from a return to combat if Hamas does not agree to terms of a new ceasefire proposal – which, Israel says, has been drafted by US Middle East envoy Steve Witkoff.

The new plan would require Hamas to release half its remaining hostages – the group’s main bargaining chip – in exchange for a ceasefire extension and a promise to negotiate a lasting truce.

Read more:
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Israel has made no mention of releasing more Palestinian prisoners, a key component of the first phase.

Fighting in Gaza has been halted since 19 January.

Hamas has exchanged 33 Israeli and five Thai hostages for some 2,000 Palestinian prisoners and detainees.

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Trump admits tariffs ‘disturbance’ as China says it is ‘ready for any type of war’ with US

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Trump admits tariffs 'disturbance' as China says it is 'ready for any type of war' with US

Donald Trump has admitted his tariffs on major trading partners will cause “a little disturbance” – as China said it was “ready” for “any type of war” with the US.

The US president made his comments in an address to Congress, hours after the levies on imports came into effect.

Producers in Mexico and Canada have been hit with a 25% tax on items they export to the US, while a 20% tariff has been applied to Chinese imports.

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Donald Trump and Xi Jinping.
Pic:Reuters/AP
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Donald Trump and Chinese President Xi Jinping. The US president has admitted his tariffs will cause ‘a little disturbance’ – as China responds. Pic: Reuters/AP

Stock markets, which Mr Trump is said to pay close attention to, slid on the tariffs news.

Exporters in the affected countries as well as businesses in the US and economists have raised concerns about the potential price-raising impact of the tariffs.

Making imports more expensive will likely make goods more expensive and could push prices up across the board.

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Trump’s Congress speech unwrapped

Concern over threat to interest rates

A cycle of high inflation could lead to interest rates being higher for longer in the US, the world’s largest economy, which could dampen economic activity.

A slowed US economy would have global consequences but even without a hit to the States, there are fears of a global trade war – in which countries add their own trade barriers in the form of tariffs.

The Chinese embassy in the US posted on X: “If war is what the US wants, be it a tariff war, a trade war or any other type of war, we’re ready to fight till the end.”

China imposes retaliatory tariffs

The president, however, said he was “just getting started” after 43 days into his second term.

China and Canada have retaliated with their own tariffs against the US.

From next week China will add its own 15% levy on a range of agricultural products such as chicken, wheat, corn and cotton.

An extra 10% will be added to soya beans, pork, beef, fruit, vegetables and dairy products imports.

The country has also raised additional complaints against the US with the World Trade Organisation (WTO).

Read more:
Beijing’s patience is running thin
‘Dumb’: Canadian PM criticises Trump over tariffs
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Speaking to Sky News presenter Yalda Hakim the US former deputy national security advisor Matt Pottinger said Chinese president Xi Jinping was turning the Chinese economy “into a wartime economy”

“He’s preparing his economy for war so that it can withstand the shocks of war,” he said on The World with Richard Engel and Yalda Hakim podcast

“That means he’s willing to undergo massive inefficiencies in the economy. He’s willing to stockpile food that otherwise would flow easily and more cheaply in from foreign vessels.”

“He’s stockpiling copper and all kinds of inputs into the economy. He is making sure that the private sector is wholly aligned with his broad goals, which are about increasing the Chinese Communist Party’s control over the economy and creating a bigger, better defence industrial base,” Mr Pottinger said.

“He’s preparing for war.”

👉Listen to The World with Richard Engel and Yalda Hakim on your podcast app👈

Compromise ‘as early as Wednesday’?

Canada’s prime minister Justin Trudeau said his country was launching its own WTO challenge and described the US tariffs as a “dumb thing to do”.

He also warned the move by the Trump administration would impact American workplaces and add to inflation in the US.

Addressing the American public, he said: “We don’t want this… but your government has chosen to do this to you.”

Canada has announced the imposition of 25% tariffs on US imports worth C$30bn (£16.3bn).

But US commerce secretary Howard Lutnick struck a different note on tariffs and on Monday said the president will “probably” announce a compromise with Canada and Mexico as early as Wednesday.

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