CHANCELLOR Jeremy Hunt has warned the Government must maintain its “disciplined approach” to the public finances if it is to get inflation under control.
The move sounds like an echo Margaret Thatcher’s approach to rising inflation in the early 1980s when she cut spending and raised interest rates, a recession followed and unemployment rose to dizzying heights but there was a eventual economic boom in the mid-eighties that largely set the tone for the next three decades with a move to the service industry and a shift from a centralised, state-controlled institutions to privatisation and economic reform and a focus on free market capitalism.
Mr Hunt is facing calls from some Tory MPs to cut taxes in his Budget in March in a bid to kick-start growth in the UK economy.
At a Cabinet away day at Chequers, Rishi Sunak and the Chancellor both emphasised inflation was only predicted to fall because of the “tough decisions” taken in the autumn statement to stabilise the economy.
The Chancellor said it would be necessary to retain this disciplined approach in order to reduce inflation, because it is the greatest driver of the cost of living,” according to a No 10 readout of the meeting.
The gathering, at the Prime Minister’s grace-and-favour residence in the Buckinghamshire countryside, took place amid frustration among some Conservative MPs who believe current tax policies are stifling growth and investment.
The Bank of England was forced to make an emergency intervention in the markets after then chancellor Kwasi Kwarteng’s £45 billion package of unfunded tax cuts sent sterling into freefall.
On reducing debt and growing the economy, Mr Hunt was said to have told ministers that “helping more people back into work was one of the most important steps which could have immediate benefits for everyone”.
Health Secretary Steve Barclay briefed the meeting on efforts to tackle the NHS backlog while Home Secretary Suella Braverman updated ministers on measures to stop migrants in small boats crossing the Channel.