Deep cuts ahead to tackle ‘massive black hole’
Rishi Sunak and Jeremy Hunt have been engrossed in discussions over a “massive fiscal black hole” in the public finances that contributed to delaying the Halloween fiscal plan.
The prime minister is now targeting up to £50 billion in spending cuts and tax rises in what will be a full Autumn Statement on 17 November.
A revision of the Chancellor’s plan follows expectations that the Office for Budget Responsibility will add to warnings of recession next year.
Mr Sunak and Mr Hunt are now accepting the country is facing some stark truths about the state of the economy and the ability of the public finances to meet expectations as lower taxes result from slowing growth.
There is a possibility of a reversal of Ms Truss’s guarantee to protect the triple lock on pensions, that would give pensioners a 10.1% rise based on September’s inflation figure.
The Chancellor has spoken to a number of his predecessors, including George Osborne who brought in austerity measures in the coalition government more than a decade ago.
The OBR has yet to provide final forecasts but will significantly downgrade its 1.8% growth forecast in March.
While government borrowing costs have fallen somewhat in recent days, officials warned Mr Hunt and Mr Sunak that they remain considerably elevated as global interest rates also rise.
The interest rate – or yield – on 10-year UK government debt is just over 10 basis points higher than before the mini-budget.