Jeremy Hunt offers hope on pay settlements but rules out feeding inflation
Chancellor Jeremy Hunt has not ruled out increasing pay offers to public sector workers, but warned that giving more money to teachers and nurses could entrench high inflation.
Speaking as it was revealed the UK economy narrowly avoided recession in 2022, Mr Hunt also indicated he would resist pressure to cancel a planned cut to household energy support that will see typical bills rise by £500 to around £3,000 in April.
Asked if there were any circumstances in which he would consider increasing pay offers to avert more public sector pay strikes the chancellor told Sky News: “It’s not a no, but I’m saying we’ll talk about absolutely anything, except things that will dig in the very high inflation that is causing people to see the cost of their weekly shop go up and the value of their wages erode.
“We’ll talk about absolutely anything to resolve the strikes except measures that will entrench high inflation.
“We don’t think strikes are helpful, they’re very damaging and very disruptive. The best way to resolve these issues is to sit and talk and find a solution that doesn’t entrench the very inflation that is upsetting so many people.”
Many economists dispute the argument that increasing public sector pay can entrench inflation, but Mr Hunt said it was a key factor in holding down pay.
“We should listen to a very clear warning from the Bank of England governor on Thursday who said that if you fund higher wage settlements through borrowing, that is inflationary, and that’s why it’s a very difficult situation. We want to get back into a situation where people’s real wages are growing.”
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Why is the UK economy so weak?
On maintaining energy support, a measure that would reduce inflation for family budgets, he argued that continuing support at current levels would damage the public finances.
The cost to the taxpayer of existing support has proved much lower than initially forecast because wholesale gas prices have fallen, leading campaigners and the energy industry to call for support to be maintained.
“We are doing absolutely everything we can to help families through this difficult period,” Mr Hunt said. “We’re giving about £3,500 of support on average to every family in the country this year and last year, so it’s a massive amount, about £99bn.
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“But we also have to be responsible with public finances. Because if we’re not we just give them a different pressure, which is higher interest rates as a result of the reasons. We look at everything we can do, but we won’t do things that lead to higher interest rates.”
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Thousands of NHS workers strike
The chancellor’s position on pay and energy reflects the dismal state of the public finances.
The official figures released by the Office for National Statistics earlier on Friday paint a grim picture of a stagnating economy with a dysfunctional public sector.
The Bank of England is forecasting a recession this year, albeit slightly less acute than previously, and forecast the UK will not recover to its pre-pandemic scale until 2026.
There is also acute pressure on Mr Hunt from businesses to incentivise investment and growth. Pharmaceutical giant AstraZeneca offered a stark example of the impact of government policy this week, citing rising corporation tax as the reason it has chosen to build a new manufacturing facility in Ireland not the UK.
Mr Hunt rejected the characterisation of the UK’s prospects.
“We believe that this country has some of the most exciting growth prospects anywhere if you look at our strengths in technology,” he said.
“Last year, we became only the third country in the world to have a trillion-dollar tech economy, our strengths are the life sciences and in clean energy where we’re a world leader in offshore wind. We think we have fantastic growth prospects.
“But to take to make the most of those we have to deal with our inflation issue which is over 10%, and for companies that want to invest high interest rates are a real disincentive.
“We need to get interest rates down. That was working with the Bank of England to deal with inflation. And then we think we have tremendous growth prospects.”
Donald Trump has said that his 28-point peace plan for Ukraine is “by far” not the “final offer”, ahead of crisis talks in Geneva.
Meeting on the sidelines of a G20 summit in South Africa, European and other Western leaders scrambled to respond to the US president’s demand for Ukraine to accept the plan drawn up by the Trump administration and the Kremlin.
In a joint statement on Saturday, they said the plan announced on Friday could serve as a basis for talks to end Russia’s war in Ukraine but required “additional work”.
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How Ukraine peace plan came about
Follow the latest on the Ukraine peace plan
As a result, a meeting has been hastily convened in Geneva, Switzerland, on Sunday, where national security advisers from the E3 – France, Britain and Germany – will meet EU, US and Ukrainian officials for further discussions.
Ahead of the talks, Volodymyr Zelenskyy said in a video address to his nation that Ukrainian representatives at the talks “know how to protect Ukrainian national interests and exactly what is needed to prevent Russia from carrying out” another invasion.
“Real peace is always based on security and justice,” the Ukrainian leader added.
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PM: ‘More to do’ on US Ukraine peace plan
The 28-point peace plan closely resembles the list of demands repeatedly stated by the Kremlin since it launched its full-scale invasion of Ukraine nearly four years ago and if adopted, would see Ukraine cede territory to Russia – and cut the size of its military.
Mr Trump has said he wants a response from Ukraine by Thursday, while suggesting an extension could be possible.
On Saturday, Mr Trump told reporters outside the White House that the plan was not the “final offer” when asked.
He said: “We’d like to get the peace, it should’ve happened a long time ago. The Ukraine war with Russia should’ve never happened. If I was president, it would have never happened. We’re trying to get it ended. One way or another, we have to get it ended.”
His secretary of state Marco Rubio insisted that the peace proposal was authored by the US, despite what a handful of senators have alleged.
“It is based on input from the Russian side. But it is also based on previous and ongoing input from Ukraine,” he said.
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The 28-point peace plan explained
Leaders have sought to balance praise for President Trump’s attempt to end the war with recognition that some terms in his proposal are unpalatable for Kyiv.
“There are many things that cannot simply be an American proposal, which requires broader consultation,” French
President Emmanuel Macron said on the sidelines of the G20, adding that an agreement had to allow for peace for Ukrainians and “security for all Europeans”.
German Chancellor Friedrich Merz underlined the importance to Europe of supporting Ukraine.
“If Ukraine loses this war and possibly collapses, it will have an impact on European politics as a whole, on the entire European continent. And that is why we are so committed to this issue,” he said.
“There is currently an opportunity to end this war, but we are still quite a long way from a good outcome for everyone.”
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Keir Starmer calls for growth plan at G20
Prime Minister Sir Keir Starmer told reporters in Johannesburg: “We are concerned about [caps on military], because it’s fundamental that Ukraine has to be able to defend itself if there’s a ceasefire.”
He said the proposal “requires additional work”, adding: “And that’s why there’s been the agreement that in Geneva tomorrow [Sunday], you’ll have senior US personnel, you’ll have European NSAs [national security advisers], including the UK NSA, and obviously Ukrainians there to work further on the draft.”
Sir Keir also spoke to Mr Trump, relaying discussions held at G20 to the US leader, according to a Downing Street spokesperson, who added that the two leaders would speak again on Sunday.
Meanwhile, Sir Keir, who has defended his decision to fly to the G20 days before a difficult budget, said the role of the G20 is “critical at this moment”.
“The G20 has worked together before to fix fundamental problems in the global economy. We need to find ways to play a constructive role again today in the face of the world challenges,” he said.
“I’d like to see us come together around a five-point plan for growth that leaves no one behind.”
Sir Keir Starmer, Emmanuel Macron and Friedrich Merz at the G20 summit. Pic: PA
The US, however, is boycotting the talks.
The Trump administration made its opposition to South Africa’s G20 agenda clear earlier this year when the country started holding meetings ahead of the summit. South Africa gets to set the agenda as the country holding the rotating G20 presidency.
G20 leaders broke with tradition and adopted a declaration at the start of their summit – despite opposition from the US.
Vincent Magwenya, spokesman for South African president Cyril Ramaphosa, said a leaders’ declaration was adopted unanimously in Johannesburg.
The White House later accused South Africa of refusing to facilitate a smooth transition of the G20 presidency.
Pic: AP
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The G20 bloc was formed in 1999 as a bridge between rich and poor nations to confront global financial crises.
While it often operates in the shadow of the powerful Group of Seven nations, G20 members represent around 85% of the world’s economy, 75% of international trade and more than half the global population.
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