The best cut is inflation: Hunt hits back at recession ‘declinism’ but appears to rule out tax cuts in March budget

Jeremy Hunt today hit back at gloomy assessments about the UK’s economic prospects but told voters not to expect tax cuts at the March budget.

In a speech at Bloomberg, the chancellor said “declinism about Britain is just wrong” adding that the economy has actually grown faster than fellow G7 nations France, Italy and Japan.

“Economists and journalists know you can spend a long time arguing the toss on statistics, but the strongest grounds for optimism comes not from debating this or that way of analysing data, but from what we’ve been hearing about this morning, our long-term prospects.”

Hunt’s speech was an attempt to offer some upbeat predictions about the UK’s economic health after months of forecasters warning the country was on course for what could be the longest recession in a century.

A raging cost of living crisis fuelled by inflation racing to a 40-year high of 10.5 per cent has chilled household and business spending, squeezing GDP growth.

“The best tax cut right now is a cut in inflation,” Hunt said, indicating he is unlikely to splash the cash at the budget on 15 March.

The chancellor pinned down the UK’s economic decline to a “a decade of black swan events,” referring to the global financial crisis in 2008 and Covid-19 pandemic, both of which hit GDP hard.

While this year’s recession is expected to be long, it is likely to be relatively shallow and comparable in depth to the slump in the early 1990s.

Murmurs among Conservative MPs to cut taxes next month to stimulate growth have been gathering pace recently, reportedly shephereded by former prime minister Liz Truss.

Her £45bn of unfunded tax cuts last September rocking financial markets is likely to deter Hunt from being loose with the public finances.

The chancellor set out intentions to roll back EU regulation after Brexit in a bid to unshackle businesses and stimulate growth.

“Our plan for growth is a plan built on the freedoms which Brexit provides. It is a plan to raise productivity. It is a plan to use the proceeds of growth to support our public services at home, to support businesses in the new low carbon economy and to support democracy abroad,” he said.