Jeremy Hunt may still have to find £40bn of cuts as chancellor, say experts
Liz Truss’s new chancellor, Jeremy Hunt, may still have to draw up spending cuts worth up to £40bn to convince markets the government can balance the books, experts warned after Friday’s humiliating U-turn.
Speaking at a Downing Street press conference, Truss dropped a heavy hint of austerity to come, saying: “Our public sector will become more efficient, to deliver world-class services for the British people, and spending will grow less rapidly than previously planned.”
Paul Johnson, the director of the Institute for Fiscal Studies thinktank, said that with high inflation already eating into Whitehall budgets, spending “can’t increase much less quickly without actually going down”.
Just two days earlier, when asked by Keir Starmer whether she would stick with her campaign promise that she would not cut public spending, Truss said: “Absolutely.”
Frances O’Grady, the general secretary of the TUC, warned against a fresh squeeze on the public sector in the coming years.
“Our NHS, schools and all our public services have been slashed to the bone over the last 12 years. There is nothing left to cut,” she said. “Hospital waiting lists are at record highs, school buildings are crumbling before our eyes and local services are on their knees.”
In her brief, awkward statement, Truss reinstated Rishi Sunak’s planned increase in corporation tax, worth almost £19bn a year, which had been a key dividing line between the pair during the summer leadership race.
The Resolution Foundation thinktank said that after cancelling Kwasi Kwarteng’s plan to scrap the top rate of tax earlier this month, Truss had now reversed 45% of her tax-cutting package.
Taking into account the sharp increase in government borrowing costs after bond yields were driven
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