Jeremy Hunt's Tax Cut Plans Hindered by Rising Government Borrowing
Jeremy Hunt's tax cut plans have encountered a setback as government borrowing rose above twenty billion pounds last month. Higher spending on benefits and lower tax receipts contributed to this increase, posing challenges to Hunt’s pre-election tax cut aspirations. Analysts and the International Monetary Fund caution against further tax cuts due to potential fiscal instability.
Jeremy Hunt's plans for pre-election tax cuts have faced a setback due to a £20bn rise in government borrowing last month.
The Office for National Statistics (ONS) reported a budget deficit increase of £1.5bn compared to the previous year, marking the fourth highest April deficit since records began.
The Office for Budget Responsibility (OBR) highlighted that the deficit was £1.2bn higher than expected, driven by increased Whitehall spending, benefit rises, and weaker tax revenues.
The introduction of Hunt's second cut in national insurance contributions also contributed to this scenario, with the OBR revising the 2023-4 deficit estimate up by £0.8bn.
Central government debt reached 97.9% of national income in April, its highest since the early 1960s.
Analysts, including Rob Wood from Pantheon Macro, expressed skepticism about room for tax cuts without breaching fiscal rules.
Peter Arnold from EY UK predicts the underwhelming financial performance to persist through 2024-5.
The International Monetary Fund has advised Hunt against pre-election tax cuts, citing a potential £30bn public finances shortfall.
The Treasury emphasizes the need to stick to the plan to reduce debt despite these pressures.
The Office for National Statistics (ONS) reported a budget deficit increase of £1.5bn compared to the previous year, marking the fourth highest April deficit since records began.
The Office for Budget Responsibility (OBR) highlighted that the deficit was £1.2bn higher than expected, driven by increased Whitehall spending, benefit rises, and weaker tax revenues.
The introduction of Hunt's second cut in national insurance contributions also contributed to this scenario, with the OBR revising the 2023-4 deficit estimate up by £0.8bn.
Central government debt reached 97.9% of national income in April, its highest since the early 1960s.
Analysts, including Rob Wood from Pantheon Macro, expressed skepticism about room for tax cuts without breaching fiscal rules.
Peter Arnold from EY UK predicts the underwhelming financial performance to persist through 2024-5.
The International Monetary Fund has advised Hunt against pre-election tax cuts, citing a potential £30bn public finances shortfall.
The Treasury emphasizes the need to stick to the plan to reduce debt despite these pressures.
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