TAXING TIMES
Jeremy Hunt urged to slash taxes by Tory MPs after UK dipped into mild recession
Hunt warned that he will only cut taxes in a 'responsible' way
JEREMY Hunt faces calls for tax cuts from his own MPs as it emerged the UK dipped into a mild recession last year.
The Chancellor is being urged to press ahead with sizable giveaways in next month’s Budget in a bid to get Britain growing.
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But No10 and the Treasury were dealt a blow by the fiscal watchdog as his headroom for sweeteners has halved — leaving around £13billion to play with.
They had been looking to cut national insurance or income tax, which has been taken off the table for the time being.
Ex-Business Secretary Jacob Rees-Mogg said: “The economy clearly needs a boost and this should come in the form of lower interest rates and tax cuts.”
Former Cabinet Minister John Redwood added: “The Government must take more action. The forecasts will show they can afford tax cuts.”
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The calls come as it emerged the UK entered technical recession — two quarters of negative growth — as total economic output dropped 0.3 per cent from October to December.
It fell 0.1 per cent the previous quarter. But Mr Hunt said there was “light at the end of the tunnel”.
He added that he will only cut taxes in a “responsible” way.
He said: “I certainly wouldn’t do anything that fuelled inflation just when we are starting to have some success in bringing down inflation.”
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Shadow Chancellor Rachel Reeves said the stats show the PM’s plans to grow the economy are “in tatters”.
But economist Ruth Gregory said the recession was “as mild as they come”.
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The PM and Tory MPs will be keen to stress that it is a “technical” recession, meaning two consecutive quarters of negative growth.
It is a binary term: You’re either in a recession, or you’re not.
And because the last two quarters of 2023 were -0.1 and -0.3 per cent respectively, the economy has just slid under the wrong side of the line.
There has been no economic crash overnight, no run on the banks, no market turmoil.
However, the issue for Mr Sunak is that, for a lot of voters, that is what comes to mind when they think of the word “recession” - a 2008-style financial crisis.
Even the Bank of England boss Andrew Bailey said people should not worry.
Speaking earlier this week he said he would “not put too much weight” on the news, saying the recession would be “very shallow”.
It does mean that the PM’s pledge to “grow the economy” is not yet being met, with Labour describing it as “in tatters”.
Growth has been sluggish for a while, as it has been in many European countries grappling with inflation following Russia’s invasion of Ukraine and the Covid fallout.
Firing up the economy would always be difficult while trying to take the heat out of price rises, which Britain has now successfully done.
Inflation stats defied expectation this week as they held steady at 4 per cent, flying in the face of more gloomy forecasts.
Mr Sunak’s job now will be to convince people he has a credible economic plan for growth.
For many Tory MPs that can only mean one thing: tax cuts at next month’s Budget.
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