British Finance Minister Sticks To Taxhiking Plans, Pledges PostBrexit Reforms

British Finance Minister Sticks To Taxhiking Plans, Pledges PostBrexit Reforms
  • Chancellor of the Exchequer Jeremy Hunt said on Friday he would push for higher taxes and called for Brexit to be a "catalyst" for UK economic growth.
  • The UK has appealed to global tech companies for help to make it the 'next Silicon Valley of the world'.
  • Hunt's speech comes as UK inflation recently hit 10.5% in December, beating the Bank of England's 2% target.

Jeremy Hunt gave a speech on Friday where he outlined plans for UK economic growth. © CNBC Contributor Jeremy Hunt gave a speech on Friday outlining the UK's economic growth plans.

LONDON – British Chancellor Jeremy Hunt said on Friday he would push for higher taxes, stressing the importance of making Brexit "mandatory" for UK growth.

"The best tax cut is to reduce inflation," Hunt said in a speech to tech giants including Amazon, Google and Methane as he sought to lift the UK economy out of the "gloom".

There has not been "enough" optimism in the UK economy in recent months, Hunt said.

Hunt told the companies they were important to the UK's prospects but that "the UK is very important to your future" and asked them to help make the country "the next Silicon Valley of the world".

The Minister of Finance emphasized making the United Kingdom a place where companies can do business.

He insisted the UK should have "nothing less than the most competitive tax regime of any major country", despite a proposed rise in corporation tax from 19% to 25% after it was scrapped by former finance minister Kwasi Kwarteng.

Susan Streeter, senior investment and market analyst at Hargreaves Lansdowne, said Hunt's recent comments were more about improving the picture of UK economic conditions than introducing new policies.

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“Jeremy Hunt is committed to rebuilding the UK economy, from the firefighter to the construction worker. But there are no ready-made concrete solutions to the problems plaguing the UK,” Streeter wrote in an analyst note.

Details are "very lacking," he added, adding that "the architects of this plan don't know exactly how it's going to be paid for."

The pound fell 0.25% to $1.237 against the dollar after the speech. Hunt has made up some of his losses since entering the competition, but Thursday he was just shy of the six-week mark.

Hunt's speech comes as UK inflation recently hit 10.5% in December, beating the Bank of England's 2% target. The bank will then meet on February 2 to decide on monetary policy.

Concerns about the US deflationary law

Jeremy Hunt said the UK government had some concerns about the US anti-inflation law during a question-and-answer session after his speech on Friday.

The controversial Repeal Act is a landmark climate and tax deal that will bring billions of dollars to climate change programs and accelerate America's transition to zero carbon.

"We believe in free trade and we believe that if we want to achieve the all-important net zero, we will be more effective if we remove our American competitive advantage," Hunt said on January 19, citing concerns raised by EU Trade. Commissioner Valdis Dombrovskis said the measures would "discriminate against EU trade".

“Are we worried about the long-term future of our clean energy industry? Absolutely not,” Hunt added.

Hunt's comments echo those of his German counterpart, Christian Linder, who told CNBC in November that he was "concerned about the implications of the deflation rule."

"Our overall approach must be to ensure that valued partners remain preferred business partners," he said.

Questions to the Prime Minister (PF) – 25 January 2023

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