London Daily

Focus on the big picture.
Wednesday, Jul 02, 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
Poland Implements Border Checks Amid Growing Migration Tensions
Political Dispute Escalates Between Trump and Musk
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
US Senate Votes to Remove AI Regulation Moratorium from Domestic Policy Bill
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
Jury Deliberations in Diddy Trial Yield Partial Verdict in Serious Criminal Charges
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
King Charles Plans Significant Role for Prince Harry in Coronation
Two Chinese Nationals Arrested for Espionage Activities Against U.S. Navy
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
Trump Administration Considers Withdrawal of Funding for Hospitals Providing Gender Treatment to Minors
Texas Enacts Law Allowing Gold and Silver Transactions
China Unveils Miniature Insect-Like Surveillance Drone
OpenAI Secures Multimillion-Dollar AI Contracts with Pentagon, India, and Grab
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Elon Musk Critiques Senate Budget Proposal Over Job Losses and Strategic Risks
Los Angeles Riots ended with Federal Investigations into Funding
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Education Secretary Announces Overhaul of Complaints System Amid Rising Parental Grievances
Massive Anti-Government Protests Erupt in Belgrade
Trump Ends Trade Talks with Canada Over Digital Services Tax
UK Government Softens Welfare Reform Plans Amid Labour Party Rebellion
Labour Faces Rebellion Over Disability Benefit Reforms Ahead of Key Vote
Jeff Bezos and Lauren Sánchez Host Lavish Wedding in Venice Amid Protests
Trump Asserts Readiness for Further Strikes on Iran Amid Nuclear Tensions
North Korea to Open New Beach Resort to Boost Tourism Economy
UK Labour Party Faces Internal Tensions Over Welfare Reforms
Andrew Cuomo Hints at Potential November Comeback Amid Democratic Primary Results
Curtis Sliwa Champions His Vision for New York City Amid Rising Crime Concerns
Federal Reserve Proposes Changes to Capital Rule Affecting Major Banks
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Trump Escalates Criticism of Media Over Iran Strike Coverage
Trump Announces Upcoming US-Iran Meeting Amid Controversial Airstrikes
Trump Moves to Reshape Middle East Following Israel-Iran Conflict
Big Four Accounting Firms Fined in Exam Cheating Scandal
NATO Members Agree to 5% Defense Spending Target by 2035
Australia's Star Casino Secures $195 Million Rescue Package Amid Challenges
UK to Enhance Nuclear Capabilities with Acquisition of F-35A Fighter Jets
Russian Shadow Payments via Cryptocurrency Reach $9 Billion
Explosions Rock Doha as Iranian Missiles Target Qatar
“You Have 12 Hours to Flee”: Israeli Threat Campaign Targets Surviving Iranian Officials
×