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Chancellor Jeremy Hunt has ruled out major pre-election tax cuts this autumn, warning he must “double up” on inflation and not “inject billions of pounds of extra demand” into the UK economy.
“We will not accept tax cuts if they make it harder to fight inflation,” Chase told the Financial Times, admitting that Prime Minister Rishi Sunak’s pledge to halve inflation by the end of the year “was going to be harder than we thought”.
Vowing to resist “inflationary” public sector wage demands, Hunt also put fresh pressure on businesses, saying they should keep prices low and have “moral responsibilities to their own customers in a cost of labor crisis.” life”.
“There are times when rebuilding margins is legitimate and there are times when you have to think about the impact on your own customers,” he said.
The Chancellor was speaking ahead of his annual address to the City of London on Monday, when he will outline ‘Mansion House reforms’ to encourage billions of pounds in retirement savings to invest in fast-growing businesses and return listing in London more attractive.
Hunt will welcome a pact by major pension companies to invest 5% of their investments in high-growth companies – up to £50bn – but he will also propose regulatory reforms and threaten to intervene if smaller companies ineffective retreat do not merge.
FTSE 100 groups Aviva, Legal & General and Phoenix Group are among those expected to take part in the pact organized by the City of London Corporation, people familiar with the plans have said.
Aviva declined to comment on the pact, while Phoenix has not confirmed its participation. L&G did not respond.
The Chancellor will reassure the City that he wants to work with pension companies rather than telling them what to do.
Hunt’s Mansion House speech aims to support stronger future economic growth, but he and Sunak focus on the immediate task of controlling rising prices: Inflation in the UK in May was 8.7%, higher than in comparable countries.
“We are redoubling our efforts to fight inflation because we both believe – down to the last drop of DNA – that no sustainable long-term growth is possible in a high inflation economy,” did he declare.
Some Tory MPs are calling for tax cuts in the Chancellor’s autumn statement, but Hunt said: ‘If we were to pump billions of pounds of extra demand into the economy when inflation is already too high, this would mean that fiscal policy would work against monetary policy. ”
Asked if he was ready to accept political criticism if he continued to prioritize fiscal discipline over tax cuts, Hunt said: “We are already taking political criticism at this. topic, but it’s the right thing to do.”
Hunt has suggested that his commitment to keeping tight control over the purse strings will prevent him from accepting public sector wage increases of more than 6%, which are likely to be recommended by independent watchdogs, unless that they are funded from existing Whitehall budgets.
“We will not resolve these public sector wage disputes with inflationary measures,” he said.
He added that if wage deals were funded in such a way as to create additional demand in an overheated economy “it would only make it more difficult to fight inflation”. The impasse over public sector wages could lead to strikes extending into the fall.
Hunt’s speech will outline “evolutionary” changes to city regulations intended to deliver higher returns to investors, improve research facilities and simplify rules for buying and selling stocks.
Three ‘golden rules’ will underpin the reforms: getting the best possible outcome for savers, strengthening the UK’s position as a leading financial centre, and prioritizing ‘a strong and diverse gilt market “.
Hunt will also outline plans to reform London’s capital markets, simplifying regulation and using ‘Brexit freedoms’ to make it ‘easier than ever for businesses to research, raise finance and launch their businesses’.
The Treasury said it would simplify the prospectuses companies must produce for investors. There would also be a “new kind of stock market” in the form of an “intermittent trading platform” that would allow private companies to have their shares bought and sold on the stock exchange on specific days without the need for a quoting.
Additional reporting by Josephine Cumbo