Difficult to see tax cuts this year, says Jeremy Hunt as party rows over future plans
Chancellor Jeremy Hunt has refused to commit to tax cuts ahead of the next election, despite growing calls from inside his party.
His cabinet colleague Michael Gove told Sky News on Sunday that he wanted to see “the tax burden reduced” by the time the public goes to the polls.
But speaking to Kay Burley this morning, Mr Hunt said “big tax cuts now… would be inflationary”, and “nothing is going to compromise [the] battle” to bring that figure down.
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Asked if we could see a headline tax cut before the next election, he said: “It’s very difficult to see having that kind of tax cut this year.”
And pushed on whether he would commit to the pensions triple lock at the next election, Mr Hunt said – after a long pause – that the decision would come in the autumn statement.
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Tories battle over taxes
The comments came ahead of the chancellor’s speech to the Conservative Party conference in Manchester this afternoon, where he is due to announce a rise in the living wage and stronger benefits sanctions.
But it also came before the return of former prime minister Liz Truss to the annual event, where she will speak at the Great British Growth Rally to demand a cut in corporation tax – a policy that was part of her disastrous mini-budget just 12 months ago.
Some Conservative backbenchers have long called for tax cuts from Number 11 as the current burden on households is at a 70-year high.
But the row reignited on the first day of this year’s conference after Mr Gove’s remarks to Sky News – followed by Prime Minister Rishi Sunak’s refusal to sign up for the pledge.
Pushed on whether there would be tax cuts ahead of the next election, Mr Hunt said: “I would love to see tax cuts for working people and obviously tax cuts for everyone.
“[However], if we gave big tax cuts now, that would put more money in people’s pockets [but] that would be inflationary. And right now, we are in a big battle which is succeeding to bring down inflation.”
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The chancellor echoed the comments from Mr Sunak that “the fastest thing we can do” to help households is to reduce inflation, before adding: “Do we want to move to lower taxes as soon as we can? Yes, but it means difficult decisions and we’re prepared to take those difficult decisions.”
But like the prime minister, he would not commit to a timetable, saying he did not have “a crystal ball” and it would be wrong to “make a prediction one way or the other”.
“I can’t tell you what the state of the economy is going to be going forward,” said Mr Hunt. “What I can say is that it’s very difficult to see having that kind of tax cut this year.
“Public finances don’t allow that. Our interest payments are predicted to be much higher than at the spring budget and it would be inflationary.
“But if you’re asking me, is it something that I’m willing to put us on a path to doing, I do want us to have lower taxes and I’m prepared to take the difficult decisions to make that happen”.
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Sir Keir Starmer has said his government stands ready to use industrial policy to “shelter British business from the storm” after Donald Trump’s new 10% tariff kicked in.
The UK was among a number of countries hit with the lowest import duty rate following the president’s announcement on 2 April – which he called ‘Liberation Day’, while other nations, such as Vietnam, Cambodia and China face much higher US levies.
But a global trade war will hurt the UK’s open economy.
The prime minister said “these new times demand a new mentality”, after the 10% tax on British imports into America came into force on Saturday. A 25% US levy on all foreign car imports was introduced on Thursday.
It comes as Jaguar Land Rover announced it would “pause” shipments to the US for a month, as firms grapple with the new taxes.
On Saturday, the car manufacturer said it was working to “address the new trading terms” and was looking to “develop our mid to longer-term plans”.
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Jobs fears as Jaguar halts shipments
Referring to the tariffs, Sir Keir said “the immediate priority is to keep calm and fight for the best deal”.
Writing in The Sunday Telegraph, he said that in the coming days “we will turbocharge plans that will improve our domestic competitiveness”, adding: “We stand ready to use industrial policy to help shelter British business from the storm.”
It is believed a number of announcements could be made soon as ministers look to encourage growth.
NI contribution rate for employers goes up
From Sunday, the rate of employer NICs (national insurance contributions) increased from 13.8% to 15%.
At the same time, firms will also pay more because the government lowered the salary threshold at which companies start paying NICs from £9,100 to £5,000.
Also, the FTSE 100 of leading UK companies had its worst day of trading since the start of the pandemic on Friday, with banks among some of the firms to suffer the sharpest losses.
Sir Keir said: “This week, the government will do everything necessary to protect Britain’s national interest. Because when global economic sands are shifting, our laser focus on delivering for Britain will not. And these new times demand a new mentality.”
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Trump defiant despite markets
UK spared highest tariff rates
Some of the highest rates have been applied to “worst offender” countries including some in Southeast Asia. Imports from Cambodia will be subject to a 49% tariff, while those from Vietnam will face a 46% rate. Chinese goods will be hit with a 34% tariff.
Imports from France will have a 20% tariff, the rate which has been set for European Union nations. These will come into effect on 9 April.
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Sir Keir has been speaking to foreign leaders on the phone over the weekend, including French President Emmanuel Macron, Italian Prime Minister Giorgia Meloni and Australian Prime Minister Anthony Albanese, to discuss the tariff changes.
A Downing Street spokesperson said of the conversation between Sir Keir and Mr Macron: “They agreed that a trade war was in nobody’s interests but nothing should be off the table and that it was important to keep business updated on developments.
“The prime minister and president also shared their concerns about the global economic and security impact, particularly in Southeast Asia.”
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Trump’s warning
Mr Trump has warned Americans the tariffs “won’t be easy”, but urged them to “hang tough”.
In a post on his Truth Social platform, he said: “We are bringing back jobs and businesses like never before.
“Already, more than FIVE TRILLION DOLLARS OF INVESTMENT, and rising fast!
“THIS IS AN ECONOMIC REVOLUTION, AND WE WILL WIN. HANG TOUGH, it won’t be easy, but the end result will be historic.”
Crypto-friendly billionaire investor Bill Ackman is considering the possibility that US President Donald Trump may pause the implementation of his controversial proposed tariffs on April 7.
“One would have to imagine that President Donald Trump’s phone has been ringing off the hook. The practical reality is that there is insufficient time for him to make deals before the tariffs are scheduled to take effect,” Ackman, founder of Pershing Square Capital Management, said in an April 5 X post.
Trump may postpone tariffs to make more deals, says Ackman
“I would, therefore, not be surprised to wake up Monday with an announcement from the President that he was postponing the implementation of the tariffs to give him time to make deals,” Ackman added.
On April 2, Trump signed an executive order establishing a 10% baseline tariff on all imports from all countries, which took effect on April 5. Harsher reciprocal tariffs on trading partners with which the US has the largest trade deficits are scheduled to kick in on April 9.
Ackman — who famously said “crypto is here to stay” after the FTX collapse in November 2022 — said Trump captured the attention of the world and US trading partners, backing the tariffs as necessary after what he called an “unfair tariff regime” that hurt US workers and economy “over many decades.”
Following Trump’s announcement on April 2, the US stock market shed more value during the April 4 trading session than the entire crypto market is currently worth. The fact that crypto held up better than the US stock market caught the attention of both crypto industry supporters and skeptics.
Source: Cameron Winklevoss
Prominent crypto voices such as BitMEX co-founder Arthur Hayes and Gemini co-founder Cameron Winklevoss also recently showed their support for Trump’s tariffs.
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Ackman said a pause would be a logical move by Trump — not just to allow time for closing potential deals but also to give companies of all sizes “time to prepare for changes.” He added:
“The risk of not doing so is that the massive increase in uncertainty drives the economy into a recession, potentially a severe one.”
Ackman said April 7 will be “one of the more interesting days” in US economic history.
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