UK’s Hunt says unclear when taxes can be cut amid interest cost pressure

By David Lawder

(Reuters) -British finance minister Jeremy Hunt said on Thursday that higher long term interest rates were pressuring the budget and it was “absolutely impossible” to predict whether there would be room for tax cuts by the time of the Spring 2024 budget announcement.

Hunt told Reuters in a telephone interview from Los Angeles that the “main reason for the pressure on our public finances is the increasing debt interest costs caused by long term interest rate projections.”

Asked whether the pressure would ease enough to propose tax cuts in the spring of 2024, Hunt said he did not see anything that would change the situation in the near term.

“But I would never be able to make a prediction about what’s going to happen in six months or 12 months.”

Hunt earlier told LBC radio that it would be “virtually impossible” to include tax cuts in his November budget update, which is due on Nov. 22 alongside the latest set of independent forecasts for public finances.

With Britain’s governing Conservatives trailing badly in opinion polls ahead of a national election expected next year, Hunt is under increasing pressure from his party’s lawmakers to announce vote-winning tax cuts.

But Hunt’s comments were the strongest indication yet that he had no such plans, saying that Britain’s high debt interest payments – driven by a surge in inflation over the last two years – left him little room for giveaways.

“If you look at what we are having to pay for our long-term debt, it is higher now than it was at the Spring Budget,” Hunt told LBC in an interview.

“It makes life extremely difficult, it makes tax cuts virtually impossible and it means that I will have another set of, frankly, very difficult decisions.

“If we do want those long-term debt costs to come down, then we need to really stick to this plan to get inflation down, get interest rates down. I don’t know when that’s going to happen. But I don’t think it’s going to happen before the Autumn Statement.”

Hunt was in Los Angeles to promote technology investments in the UK, including the newly announced expansion of Warner Bros Discovery studios in Leavesden, north of London, which is expected to create 4,000 jobs.

(Reporting by Sachin Ravikumar and William James, writing by Farouq Suleiman, editing by Timothy Gardner)