London Daily

Focus on the big picture.
Monday, Sep 01, 2025

Chancellor warns of tax rises and squeeze on spending

Chancellor warns of tax rises and squeeze on spending

Difficult decisions will be needed "across the board" on tax and spending, the new chancellor has told the BBC.

Speaking in his first interviews since replacing Kwasi Kwarteng, Jeremy Hunt said some taxes will go up, while government spending may need to fall.

Cutting the top rate of tax and not independently costing measures were mistakes being "put right", he added.

He also insisted he had a "clean slate" after Liz Truss sacked Mr Kwarteng on Friday.

Mr Hunt, a former foreign secretary who had not been part of Ms Truss's cabinet, was made chancellor on Friday as the prime minister sought to restore confidence in her government.

In another dramatic day in Westminster, the PM also scrapped the plan to freeze corporation tax - set out in the 23 September mini-budget - in another major U-turn.

Speaking to the BBC, Mr Hunt signalled a big shift away from the economic policies of Ms Truss and Mr Kwarteng.

"Taxes are not going to come down by as much as people hoped, and some taxes will have to go up," he said. "I'm going to be asking all government departments to find additional efficiency savings."

While he did not say where taxes could rise or public spending be reduced, Mr Hunt did not rule out cuts to NHS spending or rowing back on Ms Truss's pledge to increase defence spending to 3% of GDP.

The chancellor, a Rishi Sunak supporter in the leadership contest, said the government needed to "show the world we have a plan that adds up financially".

Ms Truss, prime minister for just 39 days, is already facing pressure from within her party following September's mini-budget, which included £45bn worth of tax cuts and sparked turbulence in the financial markets.

Mr Hunt said Ms Truss's administration had made "mistakes", adding: "It was wrong to cut the top rate of tax for the very highest earners at a time where we're going to have to be asking for sacrifices from everyone to get through a very difficult period."

And he also said it was wrong to "fly blind" and announce the mini-budget without a forecast from the Office for Budget Responsibility (OBR).

He said both of these were now in the process of "being put right".

The chancellor made a series of other points about the government's mini-budget and discussed possible plans for his new role in his interviews with the BBC:

*  He said he hoped to keep the 1% cut to the basic rate of income tax, but that no decisions had yet been made

*  He said he would keep the energy price guarantee and praised the former chancellor for implementing it

*  He is asking government departments to find "efficiencies", meaning possible cuts to spending

*  He also refused to commit to a pledge by Boris Johnson's government to raise benefits in line with inflation, though he said he was mindful of the needs of the most vulnerable

Meanwhile, Bank of England Governor Andrew Bailey said there had been a "meeting of minds" when he held discussions with Mr Hunt on Friday.

Mr Bailey made the comments after hinting at impending fresh interest rate hikes.

"Inflationary pressures" meant a "stronger response" could be needed from the Bank than previously thought in August, the governor said.

And the Institute for Fiscal Studies warned Mr Hunt had inherited a "difficult and tricky situation", with the public finances "very stretched".

The think tank's director Paul Johnson said: "I think we're going to see even further reversal of tax cuts that we've had, and in addition probably some very tight spending rounds."

Jeremy Hunt arriving at the BBC on Saturday


Despite Mr Hunt's appointment, Ms Truss and her premiership remain under significant pressure.

One Tory MP described the party as being in a "state of despair," but Truss supporter Christopher Chope said "time will tell" if she had done enough to secure her position.

Labour leader Sir Keir Starmer accused the prime minister of "grotesque chaos" following the sacking of Mr Kwarteng and called for a general election.

During a speech in Barnsley a day after the upheaval in Westminster, Sir Keir said Ms Truss was "clinging on", arguing that there was "no historical precedent" for the current situation facing her government.

But Mr Hunt rejected suggestions of a general election, saying the country needs "stability".


Watch: Chancellor admits mistakes made and some taxes will rise


Newsletter

Related Articles

0:00
0:00
Close
Chinese and Indian Leaders Pursue Amity Amid Global Shifts
European Union Plans for Ukraine Deployment
ECB Warns Against Inflation Complacency
Concerns Over North Cyprus Casino Development
Shipping Companies Look Beyond Chinese Finance
Rural Exodus Fueling European Wildfires
China Hosts Major Security Meeting
Chinese Police Successfully Recover Family's Savings from Livestream Purchases
Germany Marks a Decade Since Migrant Wave with Divisions, Success Stories, and Political Shifts
Liverpool Defeat Arsenal 1–0 with Szoboszlai Free-Kick to Stay Top of Premier League
Prince Harry and King Charles to Meet in First Reunion After 20 Months
Chinese Stock Market Rally Fueled by Domestic Investors
Israeli Airstrike in Yemen Kills Houthi Prime Minister
Ukrainian Nationalist Politician Andriy Parubiy Assassinated in Lviv
Corporate America Cuts Middle Management as Bosses Take On Triple the Workload
Parents Sue OpenAI After Teen’s Death, Alleging ChatGPT Encouraged Suicide
Amazon Faces Lawsuit Over 'Buy' Label on Digital Streaming Content
Federal Reserve Independence Questioned Amid Trump’s Push to Reshape Central Bank
British Politics Faces Tumultuous Autumn After Summer of Rebellions and Rising Farage Momentum
US Appeals Court Rules Against Most Trump-Era Tariffs
UK Sought Broad Access to Apple Users’ Data, Court Filing Reveals
UK Bank Shares Dive Over Potential Tax on Sector
Germany’s Auto Industry Sheds 51,500 Jobs in First Half of 2025 Amid Deepening Crisis
Bruce Willis Relocated Due to Advanced Dementia
French and Korean Nuclear Majors Clash As EU Launches Foreign Subsidy Probe
EU Stands Firm on Digital Rules as Trump Warns of Retaliation
Getting Ready for the 3rd Time in Its History, Germany Approves Voluntary Military Service for Teenagers
Argentine President Javier Milei Evacuated After Stones Thrown During Campaign Event
Denmark Confronts U.S. Diplomat Over Covert Trump-Linked Influence in Greenland
Starmer Should Back Away from ECHR, Says Jack Straw
Trump Demands RICO Charges Against George Soros and Son for Funding Violent Protests
Taylor Swift Announces Engagement to NFL Star Travis Kelce
France May Need IMF Bailout, Warns Finance Minister
Chinese AI Chipmaker Cambricon Posts Record Profit as Beijing Pushes Pivot from Nvidia
After the Shock of Defeat, Iranians Yearn for Change
Ukraine Finally Allows Young Men Aged Eighteen to Twenty-Two to Leave the Country
The Porn Remains, Privacy Disappears: How Britain Broke the Internet in Ten Days
YouTube Altered Content by Artificial Intelligence – Without Permission
Welcome to The Definition of Insanity: Germany Edition
Just a reminder, this is Michael Jackson's daughter, Paris.
Spotify’s Strange Move: The Feature Nobody Asked For – Returns
Manhunt in Australia: Armed Anti-Government Suspect Kills Police Officers Sent to Arrest Him
China Launches World’s Most Powerful Neutrino Detector
How Beijing-Linked Networks Shape Elections in New York City
Ukrainian Refugee Iryna Zarutska Fled War To US, Stabbed To Death
Elon Musk Sues Apple and OpenAI Over Alleged App Store Monopoly
2 Australian Police Shot Dead In Encounter In Rural Victoria State
Vietnam Evacuates Hundreds of Thousands as Typhoon Kajiki Strikes; China’s Sanya Shuts Down
UK Government Delays Decision on China’s Proposed London Embassy Amid Concerns Over Redacted Plans
A 150-Year Tradition to Be Abolished? Uproar Over the Popular Central Park Attraction
×