The Prime Minister and Chancellor tried to set the stage for a somber autumn statement, saying everyone should expect higher taxes and saying financial markets were expecting deep cuts in government spending .
Speaking en route to the G20 in Bali, Rishi Sunak told reporters the reason financial markets were no longer in turmoil was because they expected the government to cut borrowing and cut expenses.
“Financial conditions in the UK have clearly stabilized, but they have stabilized because people expect the government to make the decisions that will put our public finances on a sustainable path, and that is the job of the government to achieve this,” Sunak said. “And that’s what the Chancellor will do.”
Sunak and Hunt did not pledge to preserve the triple pension lock or to increase benefits in line with inflation, but the prime minister said he was “mindful of supporting the most vulnerable”.
But he added that they must “essentially [be] meet the expectations of international markets, in particular to ensure that our fiscal position is on a more sustainable path.
His comments came after Jeremy Hunt told Sky News’ Sophie Ridge on Sunday that he hoped to make the coming recession, expected to be the longest in history, “as short and superficial as possible”, and that the government “would ask everyone to make sacrifices”. ”.
Asked by the BBC if taxes were going to rise, he said: “We’re going to see everyone paying more tax, we’re going to see spending cuts, but I think it’s very important to say we’re a resilient country.
“I think, as Simon Schama would say, we have faced greater challenges in our history in the past and we are also a compassionate country.”
He told Sky News: “I think what people recognize is that if you want to give people confidence in the future, you have to be honest about the present. And you have to have a plan.
“It will be a plan to help reduce inflation, help control high energy prices and also get back on the path to healthy growth, which we so badly need.”
Sunak said he wanted to use the UK’s presence at the G20 to highlight the group’s founding as an economic forum formed during the 2008 crisis and to renew that focus on international cooperation on the economy, despite the presence of Russia at the top eclipsing much of the doable business. .
He said the UK was not the only country facing economic turmoil, a refrain he is expected to use throughout the build-up to the autumn statement to link the UK’s problems to global issues such as Ukraine and energy prices.
Labor said the UK was the only one of the G7 countries to use austerity as a prescription to fight a possible recession. Despite a third of the world being in recession, Labor said the UK was experiencing particularly weak growth due to Conservative policies, seeing the UK fall to the worst growth in the OECD behind Chile, l Italy and Mexico.
Asked if the UK should prepare for a prolonged and painful recession, Sunak said the autumn statement would explain how the UK would recover. “Part of our job is not just to bring stability back to the system, which we will do, but it’s also to lay the foundations for the recovery and growth of the economy,” he said. he declares.
“At the end of the day, that’s what we all want to see. This is how we can reduce people’s taxes over time and support public services. And you’ll also hear that side of the equation from the Chancellor.
John Glen, the chief secretary to the Treasury, said ministers would seek to save money by “eliminating waste”.
He said the government could be made “more efficient” by speeding up the sale of underused buildings, particularly “expensive central London properties”, and “turbo-pricing” plans to digitize public services.
Writing in the Sunday Telegraph, he said: “To keep delivering the things people care about in the face of inflationary pressures, without making the problem worse by extra spending at all levels, we need to make tough decisions and make government more efficient. It means eliminating waste.
“It is outrageous that public money – your money – is being sucked into the system when it could be funneled into areas that really need it.”
Shadow Chancellor Rachel Reeves has warned that “public services are already on their knees”. ‘Seven million people are waiting for NHS surgery or support… I don’t believe austerity 2.0 after the austerity we’ve been through for the past 12 years is the right approach,’ she said.
Sunak will arrive in Indonesia on Monday evening for the G20 summit which has been overshadowed by Russia’s presence, although President Vladimir Putin has pulled out.
He will tell the assembled world leaders that Russia’s war in Ukraine has affected “every household on the planet” due to rising world food prices caused by choking Ukrainian grain supplies as well as rising energy bills.
Outlining a five-point plan on the global economy, the Prime Minister will say support is still needed for the most vulnerable – including international aid – but heralds the end of more widespread support for middle-income families struggling with the cost of living, including on energy bills or mortgages before the fall statement.
As the architect of the UK’s furlough scheme, Sunak will now say that governments must “direct government support where it is most needed…effectively using government support to prioritize the most vulnerable, both in our own countries and internationally”.
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