Hunt cautions against big income tax cuts in Budget
Chancellor Jeremy Hunt has cautioned against expectations of deep tax cuts in the spring budget because of Britain’s chronic low productivity.
Tory backbenchers are calling for tax cuts as a weapon against Labour’s growing popularity ahead of the general election this year.
There is a feeling that time is running out and that voters have become wearied by cost of living pressures that they blame on the UK government’s failure to stimulate growth and continue to cap energy bills.
It is thought the Chancellor may trim the basic rate of income tax by 1p and may raise some thresholds which have been frozen for years, a move that will widen the gap with Scotland.
However, the chancellor told a cabinet meeting that he had little headroom to build on his autumn statement when he reduced national insurance by two percentage points.
Relatively low levels of productivity in Britain are “our major structural weakness”, he said in an admission that France, Germany and the US are more productive.
The International Monetary Fund warned on Tuesday against pre-election tax cuts as it downgraded Britain’s growth prospects.
It said the country should instead curb borrowing and prioritise public spending in areas such as health, education and tackling climate change.
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