Chancellor Jeremy Hunt has ruled out the possibility of tax cuts before the next election, citing concerns about the current state of public finances. Initially, there were hopes that Hunt would be able to deliver cuts later this year due to anticipated tax revenues. However, the rise in interest rates has significantly increased the cost of servicing the UK’s national debt, making tax cuts unfeasible. The Office for Budget Responsibility predicts that the interest rate bill will increase by £91.5 billion over the next five years. This, combined with rising welfare bills, has limited the Chancellor’s ability to make cuts. The government is now exploring alternative ways of raising revenue. Despite pressure to remove VAT on overseas visitors, estimates suggest that doing so would cost the Exchequer £2 billion per year, which is unaffordable at present. Hunt is also facing calls to abolish inheritance tax, but major tax changes are currently not possible due to the escalating national debt. Instead of tax reductions, the Chancellor is focusing on pension fund reforms to stimulate growth and investment in infrastructure and technology.
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