Chancellor Jeremy Hunt insists UK’s economy has ‘turned corner’ – telling public to ‘stick to plan’ for ‘better times’
Chancellor Jeremy Hunt has said that “better times are ahead” but that the fundamentals of the UK economy are “very strong”.
Speaking to Sky News in Washington, Mr Hunt pointed to price rise data from today showing a drop in the rate of inflation as well as the latest jobs figures and IMF economic growth predictions.
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Mr Hunt said: “I think the economy, we are seeing, has turned the corner, people are beginning to feel that.”
“That will continue during the course of this year. But the fundamentals for the UK economy, yes, are very strong indeed,” he added.
The cost of living crisis, brought about by months of double-digit inflation last year, has been tough, Mr Hunt said.
But sticking to his economic plan, along with the Bank of England’s work to control interest rates, will bring about “better times”, he insisted – in a sign of the likely economic messaging from the Tories ahead of the coming general election.
Jeremy Hunt urged the public to ‘stick to the plan’
“If we stick to that plan we can see that we will have better times ahead,” he said.
He added: “We don’t pretend that it hasn’t been tough, it’s been very tough in the UK and in many other countries.
“We now have the biggest technology industry in Europe. That is a big positive for families up and down the country in the years ahead.”
Sanctions warning for Iran
When asked about sanctions on Iran, following its strikes on Israel last weekend, Mr Hunt said he will be pushing for more to be added in his meetings with leaders of the G7 group of nations and with US Treasury Secretary Janet Yellen.
“What I would say is this: The talk ten days ago was of the West drifting away from its support for Israel. But when Iran attacked Israel, Western support was rock solid.
“And if Iran takes action that destabilises the global economy through what it does in the Middle East then they will face a concerted response from Western countries,” he said.
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‘I don’t want to say anything negative about Liz Truss’
Mr Hunt declined to speak ill of former prime minister Liz Truss when asked if she was harming the Conservative Party.
“I think Liz will be the first to accept that during her time as prime minister, mistakes were made,” he said of her 49-day tenure.
During her premiership government borrowing costs soared; the pound hit a 37-year low against the dollar – making imports more expensive; mortgage rates soared and the Bank of England made an unprecedented intervention to stop pension funds collapsing.
“She appointed me as chancellor. And so, you know, I don’t want to say anything negative about Liz Truss,” Mr Hunt said.
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The average two-year mortgage rate has fallen below 5% for the first time since the Liz Truss mini-budget.
The interest rate charged on a typical two-year fixed mortgage deal is now 4.99%, according to financial information company Moneyfacts.
It means there are more expensive and also cheaper two-year mortgage products on the market, but the average has fallen to a near three-year low.
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Not since September 2022 has the average been at this level, before former prime minister Liz Truss announced her so-called mini-budget.
The programme of unfunded spending and tax cuts, done without the commentary of independent watchdog the Office for Budget Responsibility, led to a steep rise in the cost of government borrowing and necessitated an intervention by monetary regulator the Bank of England to prevent a collapse of pension funds.
It was also a key reason mortgage costs rose as high as they did – up to 6% for a typical two-year deal in the weeks after the mini-budget.
Why?
The mortgage borrowing rate dropped on Wednesday as the base interest rate – set by the Bank of England – was cut last week to 4%. The reduction made borrowing less expensive, as signs of a struggling economy were evident to the rate-setting central bankers and despite inflation forecast to rise further.
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Bank of England cuts interest rate
It’s that expectation of elevated price rises that has stopped mortgage rates from falling further. The Bank had raised interest rates and has kept them comparatively high as inflation is anticipated to rise faster due to poor harvests and increased employer costs, making goods more expensive.
The group behind the figures, Moneyfacts, said “While the cost of borrowing is still well above the rock-bottom rates of the years immediately preceding that fiscal event, this milestone shows lenders are competing more aggressively for business.”
In turn, mortgage providers are reluctant to offer cheaper products.
A further cut to the base interest rate is expected before the end of 2025, according to London Stock Exchange Group (LSEG) data. Traders currently bet the rate will be brought to 3.75% in December.
This expectation can influence what rates lenders offer.
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