Everyone has to pay 'a bit more tax' says Chancellor
Jeremy Hunt has these words, ahead of Thursday's Autumn Budget announcement
Rishi Sunak has pledged to deliver on market expectations with this week's Autumn Budget, as his Chancellor warned everyone will need to pay "a bit more tax", to stabilise the economy.
The Prime Minister said Jeremy Hunt will unveil measures on Thursday, to "put our public finances on a sustainable trajectory".
It's after investors were spooked by his predecessor's ÂŁ45 billion tax-cutting bonanza.
The statement is expected to include painful public spending cuts and tax hikes, to plug a black hole in the nation's finances.
Mr Hunt earlier said "sacrifices" were required across the board to get the economy back on track.
But the planned tax rises have drawn criticism from some quarters of the Tory party, with former levelling up secretary Simon Clarke calling for the books to be balanced through spending cuts instead.
Ex-Chancellor, Kwasi Kwarteng, whose disastrous mini-budget was estimated by economists to have cost the country as much as ÂŁ30 billion, said growth would not stem from "putting up our taxes".
UK finances 'stabilised'
Speaking to reporters on the plane to Indonesia for the G20 summit, Mr Sunak said financial conditions in the UK had "clearly" steadied.
"But they have stabilised because people expect the Government to take the decisions that will put our public finances on a sustainable trajectory, and it's the Government's job to deliver on that," he said. "And that's what the Chancellor will do."
The Prime Minister said he was "cognisant" of the dire economic situation the country is facing, after gross domestic product - the measure of national income known as GDP - contracted by 0.2% between July and September, potentially marking the start of a recession.
He stressed the importance of "delivering on the expectations of international markets" to "make sure that our fiscal position is on a more sustainable trajectory".
Asked whether the budget would spell years of pain for the public, Mr Sunak said the plan is to "lay the foundations" for growth so taxes can be cut "over time".
"The Chancellor has also said that part of our job is not just to bring stability back to the system, which we will do, but it's also to lay the foundations for the economy to recover and grow," he said.
"That's how we're going to be able to cut people's taxes over time and support public services. And you'll hear that side of the equation from the Chancellor as well."
Mr Sunak will return to the UK from the gathering of the leaders of major economies in Bali just in time for the budget on Thursday.
At the summit he aims to urge leaders to "step up to fix the weaknesses in the international economic system" and persuade them he will restore stability to the economy at home.
Those who can afford it will pay the most
Mr Hunt has said "people with the broadest shoulders will bear the heaviest burden" as he is understood to be weighing up a cut to the threshold at which the highest earners start paying the top rate of tax.
The Resolution Foundation think tank's economists estimate that Liz Truss and Mr Kwarteng blew ÂŁ20 billion on unfunded cuts to national insurance and stamp duty, with a further ÂŁ10 billion lost to higher interest rates and Government borrowing costs, The Observer reported.
At the G20 summit, the Prime Minister evaded questions about whether that figure was correct and whether he would use the UK's recent experience as a lesson of how things could go wrong.
He said: "I think I said on the steps of Downing Street that mistakes were made and part of the reason I became Prime Minister was to fix that."
He pointed to global economic challenges such as soaring inflation after the Covid pandemic and Russia's invasion of Ukraine.
"Those are shared challenges and what I'll be talking about at the G20 with other leaders is what everyone is doing in their own countries and internationally to ensure resilience and stability in the financial system."
The cost of living has affected everyone this year:
Interest rates and inflation go up
Inflation rose by 8.8% in the 12 months to January 2023, down from 9.2% in December 2022. With interest rates also rising to 4%, those saving money will earn more interest on their finances, whilst those paying mortgages would pay more interest to the bank.
Energy bills
The price of energy went up incredibly as the cost of living crisis hit, with the gas price spike caused largely by the war in Ukraine. The price cap - which is set by an independent regulator to help offset costs onto customers - was set to rise to ÂŁ3,549 for an average home in October but a price freeze from the government restricted the typical bill to ÂŁ2,500. That's still an increase of 27% from the previous energy cap and as it's a cap on unit cost, the more energy you use the higher your bill will be.
Food prices
The cost of a weekly shop also has gone up as a result of the cost of living crisis. As a result of the war in Ukraine, a number of products including cooking oils and wheat have been disrupted. This means that several products are now considerably more expensive, driving bills up for customers.
Prices at the pumps
The average cost of petrol has also rose to unprecedented levels. Supply lines for petrol have been thrown into doubt as a result of the war in Ukraine, as Russia is a large export partner for gas, oil and fuel. In April 2022, the average price for a litre of petrol on the forecourt was 160.2p, whilst a litre of diesel would cost 170.5p. By late June 2022 the price had risen to an average of 190.9p for a litre of unleaded and 198.9p for a litre of diesel. In March 2023 the price wass on average of 147.03 in petrol and 167.04 in diesel.
Average cost of filling up a car with petrol hits ÂŁ100
On 9th June 2022, the average cost of filling up a car with petrol hit ÂŁ100 for the first time ever. Diesel had already hit that milestone. It comes as the cost of fuel hit a record high of one pound eighty a litre. The 2p rise was the biggest daily jump in 17 years. Prices have dropped by at least 20p per litre since the high point.