|  Updated: 

Chancellor fails to respond to MPs’ claims NI hike will stoke inflation

UK Reacts To Russian Invasion Of Ukraine
In a response to the Treasury Select Committee’s report on the October budget, Sunak recognised the UK’s public finances are “vulnerable to changes in macroeconomic conditions such as interest rates and inflation” (Photo by Jeff J Mitchell/Getty Images)

Chancellor Rishi Sunak has not responded to accusations from a group of MPs that scrutinises the government’s fiscal plans that the national insurance hike will stoke inflation.

In a response to the Treasury Select Committee’s report on the October budget, Sunak recognised the UK’s public finances are “vulnerable to changes in macroeconomic conditions such as interest rates and inflation”.

Britain’s fiscal position has become more exposed to changes to interest rates and price rises due to the government taking on vast sums of debt to deal with the fallout of the Covid-19 crisis.

“It is reassuring to see that the Chancellor is completely alive to the very real risks of rising inflation,” Tory MP and chairman of the Committee Mel Stride said.

The Committee warned the Chancellor the looming 1.25 percentage point national insurance increase could fuel inflation if it prompts businesses to lift prices to offset a higher tax bill.

The tax burden is set to swell to its highest level since the 1950s.