Positive News for the Economy
UK Chancellor Rishi Sunak is set to achieve his target of halving inflation by the end of the year, providing a much-needed boost to the economy. The latest figures, due to be released next week, are expected to show that inflation has dropped to its lowest level in two years. It is projected to have fallen to 4.8% in the year to October, down from 6.7% in September.
Government Aims to Reach 2% Target
While this news is positive, government sources stress that the fight against inflation is not over. The goal is to bring inflation down to the target rate of 2% as soon as possible. Inflation is seen as a burdensome tax on the economy, particularly affecting those on low and fixed incomes. Chair of the Treasury Committee, Harriett Baldwin, emphasized the need for inflation to be controlled, stating that it is crucial for the well-being of individuals and the economy as a whole.
Public Calls for Tax Cuts
Despite the positive economic news, Prime Minister Boris Johnson is facing discontent from voters in his own constituency, who are demanding tax cuts. According to recent polling by Survation, fewer than 10% of voters in the new Richmond and Northallerton constituency believe that taxes will be lower if the Tories win the next election. Additionally, 60% of respondents associate the Conservative Party with high taxation. These findings put pressure on Chancellor Jeremy Hunt to announce tax cuts in the upcoming Autumn Statement.
Calls for Personal Income Tax Cuts
Tory MPs, including former Cabinet Minister David Jones, are urging the Prime Minister to reduce the income tax burden on individuals. Jones argues that now is the opportune moment to put more money into people's pockets, as the government has more fiscal leeway than expected. The New Conservatives, an influential group of rising stars within the Conservative Party, have also proposed their own tax plan, which includes cuts to taxes for families and small businesses.
Concerns in the Drinks Industry
Drinks businesses have expressed concern over the Treasury's potential plan to raise alcohol duty for the second time in four months. Stephen Russell from Copper Rivet Distillery in Kent warns that further increases in alcohol duty could lead to the closure of more pubs and distilleries.
Damian Lyons Lowe, Chief Executive of Survation, notes that the government's Autumn Statement needs to offer financial hope to financially strained voters in order for the party to regain support in the polls.
