The prime minister and chancellor have tried to set the stage for a bleak autumn statement, saying everyone should expect higher taxes and arguing that financial markets expected deep cuts to public spending.
Speaking on the way to the G20 in Bali, Rishi Sunak told reporters that the reason financial markets were no longer in crisis was because they expected the government to reduce borrowing and cut spending.
“Financial conditions in the UK have clearly stabilized, but they have stabilized because people expect the government to take the decisions that will put our public finances on a sustainable path, and it is the government’s job to do that,” Sunak said. “And that is what the chancellor will do.”
Sunak and Hunt have not pledged to preserve the pension triple lock or increase benefits in line with inflation, but the Prime Minister said he was “mindful of supporting the most vulnerable”.
But he added that they must “crucially [be] meeting the expectations of international markets, especially to ensure that our fiscal position is on a more sustainable trajectory.”
His comments came after Jeremy Hunt told Sky News’ Sophie Ridge on Sunday that he hoped to make the next recession, which is expected to be the longest on record, “as short and shallow as possible”, and that the government “I would ask for sacrifices from everyone.” “.
Asked by the BBC if taxes would rise, he said: “We will see everyone paying more tax, we will see spending cuts, but I think it is very important to say that we are a resilient country.
“I think, as Simon Schama would say, we’ve faced bigger challenges in our history in the past and we’re also a compassionate country.”
He told Sky News: “I think what people recognize is that if you want to give people confidence about the future, you have to be honest about the present. And you have to have a plan.
“This will be a plan to help reduce inflation, help control high energy prices and also get back to healthy growth, which is what we so desperately need.”
Sunak said he wanted to use Britain’s presence at the G20 to underline the founding of the group as an economic forum formed in the 2008 crisis and to renew that purpose of international cooperation in the economy, despite Russia’s presence in the summit overshadowed much of the achievable business. .
He said the UK was not the only nation facing economic turmoil, a refrain that will be used throughout the build-up to the autumn statement to link UK problems to global issues such as Ukraine and energy prices.
Labor has said Britain is alone among the G7 countries in using austerity as a prescription to deal with a potential recession. While a third of the world is expected to be in recession, Labor said the UK was experiencing particularly low growth due to Tory policies, with the UK falling to the worst growth in the OECD behind Chile, Italy and Mexico.
Asked whether the UK should be prepared for a prolonged and painful recession, Sunak said the autumn statement would set out how the UK would recover. “Part of our job is not only to restore stability to the system, which we will do, but also to lay the foundations for the economy to recover and grow,” he said.
“Ultimately, this is what we all want to see. This is how we can reduce people’s taxes over time and support public services. And you’ll hear that side of the chancellor’s equation, too.”
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John Glen, the chief secretary to the Treasury, said ministers would look to save by “cutting waste”.
He said the government could be made “more efficient” by speeding up the sale of underused buildings, particularly “expensive properties in central London” and “turbocharging” plans to digitize public services.
Writing in the Sunday Telegraph, he said: “To continue to deliver the things people care about in the face of inflationary pressures, without making the problem worse with extra spending across the board, we need to take tough decisions and make government more efficient This means eliminating waste.
“It’s outrageous that public money, your money, is being absorbed into the system when it could be channeled into areas that really need it.”
Shadow chancellor Rachel Reeves warned that “public services are already on their knees”. “Seven million people are waiting for an operation or support from the NHS … I don’t think austerity 2.0 after the austerity we’ve had over the last 12 years is the right approach,” he said.
Sunak will arrive in Indonesia on Monday evening for the G20 summit, which has been overshadowed by Russia’s presence, although President Vladimir Putin has pulled out of attendance.
He will tell gathered world leaders that Russia’s war in Ukraine has affected “every household on the planet” due to rising global food prices caused by a chokehold on Ukraine’s grain supply, as well as increased of energy bills.
Unveiling a five-point plan on the global economy, the Prime Minister will say support for the most vulnerable, including international aid, is still needed, but foreshadowed the end of wider support for income families means struggling with the cost of living, including energy bills or mortgages before the autumn statement.
As the architect of the UK leave scheme, Sunak will now say that governments must “target government support where it is needed most… use government support effectively to prioritize the most vulnerable, both in our countries and internationally.”