Hunt to dismiss economic ‘gloom’ as pressure builds from Tories over tax cuts

Chancellor Jeremy Hunt will dismiss economic “gloom” in a major speech today as he promises to use “Brexit freedoms” to increase growth and productivity in the UK.

Speaking at Bloomberg’s European headquarters in London, he will attack “declinism”, instead saying the country is “poised to play a leading role in Europe and across the world in the growth sectors which will define this century”.

But his speech will come against the backdrop of a cost of living crisis, ongoing strikes over pay, and demands from some of his party to focus on tax cuts to boost the economy.

Chancellor’s speech as it happens – politics latest

Mr Hunt took over the Treasury under the turmoil of Liz Truss’ government, which saw her and her first chancellor, Kwasi Kwarteng, announce a raft of unfunded tax cuts, which saw the markets react badly.

As a result, his first speeches from Number 11 focused on the dire situation the country was left in, telling the public it was “likely to get worse before it gets better”.

But it appears the chancellor will now seek to echo some of the former prime minister’s optimistic language around growth that proved so popular with Conservative Party members, saying the government has a plan for “long-term prosperity based on British genius and British hard work”.

Mr Hunt will say: “Declinism about Britain was wrong in the past – and it is wrong today. Some of the gloom is based on statistics that do not reflect the whole picture.

“Like every G7 country, our growth was slower in the years after the financial crisis than the years before it. But since 2010, the UK has grown faster than France, Japan and Italy. Since the Brexit referendum, we have grown at about the same rate as Germany.

“If we look further ahead, the case for declinism becomes weaker still. The UK is poised to play a leading role in Europe and across the world in the growth sectors which will define this century.”

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Sky News’ business presenter, Ian King, warned the comparisons had been “very, very carefully selected… to paint the UK in a positive light”. He added: “Probably more pertinent is the fact that the UK economy is the only one in the G7… whose economy remains smaller than it was going into the pandemic.”

While Labour’s Andrew Gwynne said people were not “talking down the country”, but the Tory government was “running down the country”.

He told Sky News: “We’ve had 13 years of the same messaging. Tory chancellor, after Tory chancellor has talked about the need for growth, the need for productivity, the need for investment over the long term, the need for infrastructure, the need for levelling up.

“If I had a pound for every time a Tory chancellor spoke about all these things, I could pay Nadhim Zahawi’s tax bill.

“The proof of the pudding is in the eating and we don’t need the same old tired message. What we need is a real plan for growth.”

Inflation priority

The speech comes two months ahead of his first full budget, and a number of Tory MPs are pushing for him to introduce tax cuts to bring down the historically high tax burden under the premiership of Rishi Sunak.

Former leader Sir Iain Duncan Smith told the Daily Express: “The government must make it very clear that we believe in lowering the tax, lowering costs, giving people greater choice.

“That always seems to me to be a positive message to send – rather than saying simply you can’t do tax cuts, that’s a negative.”

But Mr Hunt is expected to resist such calls, with both him and Mr Sunak sticking to their guns that lowering record inflation is the key priority.

A readout from the cabinet’s awayday at Chequers yesterday said he told his colleagues “it would be necessary to retain this disciplined approach in order to reduce inflation, because it is the greatest driver of the cost of living”.

Instead, the chancellor will talk about exploiting what he claims are the opportunities of Brexit in order to kickstart the economy.

“Confidence in the future starts with honesty about the present, and we should not shy away from the biggest challenge we face which is our poor productivity,” he will say. “Our plan for long term prosperity tackles that challenge head on.

“It is a plan necessitated, energised and made possible by Brexit which will succeed if it becomes a catalyst for the bold choices we need to take.

“Our plan for growth is a plan built on the freedoms which Brexit provides. It is a plan to raise productivity. It is a plan to use the proceeds of growth to support our public services at home, to support businesses in the new low carbon economy and to support democracy abroad.

“It is the right course for our country and the role in the world to which we aspire.”

However, many experts believe Brexit has contributed to the UK’s struggling economy due to increased trade barriers with the EU.

Mr Hunt will also use his speech to announce that the government is to proceed with reforms to so-called “Solvency II” – an EU directive that governs the amount of funds British insurers are required to hold in reserve.

The Treasury pointed to an estimate by the Association of British Insurers which suggested the changes could unlock up to £100bn of private investment into UK infrastructure and clean energy – such as nuclear power – over the coming decade.

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