Jeremy Hunt has renewed his commitment to halving inflation as families grapple with the cost-of-living crisis after figures suggested the UK economy recovered from the pandemic faster than expected.
In a message aimed at reassurance ahead of the next fiscal event, the Chancellor acknowledged the lingering pressure on household budgets but insisted the Government’s plan to cut Consumer Price Index (CPI) inflation is working.
Labour said the comments were “completely out of touch” with the economic realities faced by families across the UK.
Mr Hunt said in a statement: “As we move into autumn, I know family budgets are still stretched, but inflation is coming down, and now is the time to see the job through.
1/5 Some important news today: the ONS have published new stats which show that Britain’s economic performance coming out of COVID was much stronger than originally thought. pic.twitter.com/zwYpNZNPcO
— Jeremy Hunt (@Jeremy_Hunt) September 1, 2023
“We are on track to halve inflation this year and by sticking to our plan we will ease the pressure on families and businesses alike.
“And it should be no surprise, despite the doubting from some. Latest figures show we have bounced back better than many other G7 economies and are one of the most attractive countries in the world to invest.”
But the Treasury added that limiting spending is seen as key to keeping interest rates down and Mr Hunt will be continuing his “public sector reform” programme aimed at making the state more efficient.
The Bank of England has increased rates 14 times in a row, to 5.25%, and is widely expected to vote for another hike at its next decision on September 21.
Elsewhere, the Chancellor and Prime Minister’s insistence on a “path to lower taxes” was on Saturday apparently undermined by Levelling Up Secretary Michael Gove, who suggested he would favour a wealth tax.
“One of the big gear changes over the past however many years has been not that income inequality has worsened – it’s not great, but it hasn’t worsened – it’s wealth inequality that has worsened,” the Cabinet minister told the Financial Times’ Political Fix podcast.
“One of the questions in my mind is how do we reward opportunity, aspiration, work and creativity and then find a way of extracting what we need for public services from those who operate in a rentier fashion.”
Labour has also moved to rule out such a tax if it wins the next election, and sought to focus on “low growth” in its attack on the Chancellor’s latest message.
Improving our estimate of businesses’ outgoings during the COVID-19 pandemic https://t.co/bbIQimUyuR
— Office for National Statistics (ONS) (@ONS) September 1, 2023
Responding to Mr Hunt’s statement, his opposite number, Rachel Reeves, said: “Jeremy Hunt’s comments are completely out of touch to the economic realities facing families across Britain.
“Going from no growth to low growth doesn’t merit a victory lap and shouldn’t be the summit of our ambitions.
“After 13 years of economic failure, the Conservatives crashed the economy and left working people worse off, with higher taxes, higher mortgages and higher bills.”
It comes after the Office for National Statistics said it was revising its estimate for gross domestic product (GDP) for 2021 after getting access to new data suggesting Britain’s economy had already returned to its pre-Covid levels by then.
By the last three months of 2021, the economy is now estimated to have been 0.6% larger than 2019 levels, compared to a previous estimate that it was 1.2% smaller.
Inflation has eased back to 6.8% from a recent eye-watering peak of 11.1% last October, but is still far from the Bank of England’s 2% target.
Prime Minister Rishi Sunak pledged to halve inflation from 10.7% back in January to around 5.3%.