UK’s Hunt explores fresh squeeze on public spending to fund tax cuts -FT

By Thomson Reuters Feb 14, 2024 | 3:52 PM

(Reuters) – British finance minister Jeremy Hunt is seeking to cut billions of pounds from public spending plans to fund pre-election tax cuts in his March budget, if penned in by tight finances, the Financial Times reported on Wednesday.

Hunt is looking at “further spending restraint” after 2025, if official forecasts suggest he does not have enough fiscal headroom to pay for “smart tax cuts,” the report said, citing treasury insiders.

The minister’s plans for a 1 percentage-point increase in public spending until 2029 are a “fiction,” economists have warned, as they would imply serious real-term cuts to some stretched public services, according to the newspaper.

Treasury officials were considering going further and reducing projected spending rises to about 0.75 percentage point a year, releasing 5 billion pounds ($6.28 billion) to 6 billon pounds for budget tax cuts, FT said, citing people close to Hunt.

“It doesn’t look like the chancellor will have as much space for tax cuts compared to last autumn, so senior folk internally are starting to look at further spending restraint and productivity gains in the future if the numbers move against us again,” the newspaper quoted a Treasury insider as saying.

“It is a tough call, but it isn’t clear whether there will be easier alternatives,” the report said.

Hunt had said in January that he did not expect the government to have the same kind of capacity to cut taxes during the budget in March as it did during the last budget update in November.

($1 = 0.7961 pound)

(Reporting by Juby Babu in Bengaluru; Editing by Leslie Adler and Matthew Lewis)