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UK Chancellor Jeremy Hunt appeared to rule out tax cuts in the near future as he stressed the need to tackle inflation.
His comments came as the latest figures from the Office for National Statistics showed the UK’s annual inflation rate ebbed to 8.7% in April from 10.1% in March.
The easing in inflation has been welcomed, but concerns remain about rising food prices.
Hunt, who was interviewed at the Wall Street Journal CEO Council summit, dashed the hopes of some backbench Tory MPs as he signalled the current high-inflation environment was not amenable to cutting taxes.
‘What is a tax cut? A tax cut is putting money in people’s pockets, so they can spend more. The biggest way that I can put money in people’s pockets, so they have more to spend is to halve inflation because that is eroding 10% of the value of people’s pay packets or has been over the last year.
‘So right now, to reflate the economy with further stimulation would mean that monetary policy and fiscal policy were pointing in opposite directions.
‘That would be the wrong thing to do.
‘If we want to cut taxes in the long run, as all conservatives want to do, because I believe in a low-tax economy, number one task is to get inflation down.’
Hunt spoke a day after the International Monetary Fund’s Managing Director Kristalina Georgieva gave a frosty reception to the prospect of tax cuts in the UK.
source: PA
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