UK finance minister Jeremy Hunt says he must raise taxes to fix economy

British finance minister Jeremy Hunt said he will have to raise taxes in next week’s budget plan to fix the public finances and soften a potentially long recession, a newspaper quoted him as saying on Saturday.

Hunt is trying to restore Britain’s credibility among investors in the first budget plan since Rishi Sunak replaced Liz Truss as prime minister last month with a vow to undo her economic policy mistakes, chiefly a series of unfunded tax cuts.

Truss’s “mini-budget” in September set off a bond market slump that sent borrowing costs soaring and ultimately forced her to step down.

“This is going to be a big moment of choice for the country and we will put people ahead of ideology,” Hunt told the Sunday Times newspaper in an interview.

“You’re going to have a Conservative chancellor who is putting up taxes that, you know, go against the very reason that he went into politics,” he said, adding: “you have to do what is right for the country and the situation that we’re in and unfortunately that does mean tax rises.”

As well as more spending cuts, Hunt and Sunak are trying to prepare their Conservative Party for the tax increases which could reignite tensions in the party that forced out Truss and allowed Sunak to become Britain’s fourth Conservative prime minister since 2016.

The newspaper said Hunt planned to tackle a £55 billion-pound (US$65.1 billion) hole in Britain’s budget by freezing thresholds and allowances on income tax, national insurance, inheritance tax and pensions for a further two years.