RISHI Sunak is preparing to drastically cut public spending and hike taxes in the government’s upcoming Autumn budget.
Treasury officials say Britain faces a daunting £50bn black hole in public finances.
Rishi Sunak is preparing to cut public spending and hike taxes to fill a £50bn black hole in the economy
In order to close the gap and ultimately save the “bleak” economy, tough decisions will have to be made.
On November 17 Chancellor Jeremy Hunt will confirm the government’s exact plan to balance the books.
It could involve less money being spent on vital services such as the NHS, policing, courts and schools.
Britain’s economy took a huge tumble in the aftermath of the Covid pandemic.
Combined with Mad Vlad Putin’s war in Ukraine, the global cost of energy and Liz Truss’ disastrous mini budget, the outlook is grim.
A treasury source warned: “Markets have calmed somewhat, but the picture is still bleak. Britain is facing an economic crisis with a massive fiscal black hole to fill.
“People should not underestimate the scale of this challenge, or how tough the decisions will have to be. We’ve seen what happens when governments ignore this reality.”
Yesterday the PM and the Chancellor held a face-to-face meeting in the Cabinet room to look at options for slashing spending and raising taxes.
Officials in the building described the meeting as “sober”.
Mr Sunak saw data from the Office for Budget Responsibility that showed economic growth is predicted to be way lower than expected.
It comes as HOAR yesterday revealed new analysis from Labour showing that this Parliament is the worst for growth since Brits crushed the Nazis in 1945.
In recent days the cost of government borrowing has dropped.
But officials warned the PM that they still remain high as global interest rates continue rising.
Mr Sunak and Mr Hunt agreed that to in order to calm jittery markets, there has to be buffer room in the UK’s finances.
This means spending cuts and tax heights might have to reach even higher than £50bn.
This week the government refused to confirm if the pension triple lock is set to be scrapped.
Ministers are also unable to say whether benefits will be uprated in line with inflation next April.
This month inflation shot up to 10.1 per cent, further tightening the cost of living squeeze.
Mr Sunak has vowed to put the needs vulnerable Brits first in his Autumn budget.
On Wednesday a No10 spokesperson said: “What I can say is Mr Sunak has shown through his record as Chancellor that he will do what’s right and compassionate for the most vulnerable.”
