Chancellor Jeremy Hunt has ruled out tax cuts in a speech where he said that reducing inflation is key to boosting economic growth. Mr Hunt outlined opportunities in what he calls “the growth sectors which will define this century”.
But his speech, made ahead of the Budget in March, made it clear the rate of price rises would have to fall before taxes are reduced.
“The best tax cut right now is a cut in inflation,” he said.
The chancellor made his speech in a week when the government has faced accusations that it has no long-term growth plan.
On Monday, the CBI business group warned the UK is lagging behind rivals on green growth.
The next day, insolvency firm Begbies Traynor said the number of firms on the brink of going bust jumped by more than a third at the end of last year.
And on Thursday, car firms warned the UK does not have a strategy to attract manufacturers.
Speaking at Bloomberg’s headquarters in London, Mr Hunt set out how the government planned to achieve growth in multiple sectors across the UK.
The speech focused on key sectors such as digital technology, green industries, life sciences, advanced manufacturing and creative industries.
He also set out a long-term plan to tackle poor productivity. “It is a plan necessitated, energised and made possible by Brexit which will succeed if it becomes a catalyst for the bold choices we need to take,” he said.
Speaking ahead of the chancellor’s speech, business leaders told the BBC what they would like to see from the government.
Carl Ennis, the UK chief executive of German industrial and engineering giant Siemens, told the BBC’s Today programme: “It is now coming up to three years since the government unceremoniously dumped their strategy for industry and I would say we really miss that.”
He also called for greater investment in education, to help give people the skills they need to work. “We would say over the last few years we’ve lost our way on that.”
Meanwhile, Steve Hare, chief executive of FTSE 100 software firm Sage Group, said: “What I’d like to see the government do is really focus and prioritise the policies and their actions in areas that drive innovation and investment and growth, so we need hard actions that help us to be the most attractive digital economy in the world.”
‘British genius’
Looking at the wider picture, Mr Hunt said that “declinism about Britain” was wrong, adding that some downbeat forecasts “do not reflect the whole picture”.
He praised what he called “British genius and British hard work”, and promised to turn that into prosperity in the long term.
It was the chancellor’s first big economic speech since he took office in October, outside of the Autumn Statement and his speech to reverse most of Liz Truss’s mini-budget.
In his Autumn Statement last November, Mr Hunt revealed tax rises and spending cuts worth billions of pounds aimed at mending the nation’s finances.
Many will see this latest speech as an attempt to respond to criticism that the government has no long-term plan for growth, in the face of the global economic shift.
That idea has been increasingly openly articulated, including by car makers this week.
On Thursday, new figures from the Society of Motor Manufacturers and Traders (SMMT) showed the number of new cars made in the UK has sunk to its lowest level for 66 years.
UK car production was further set back by the collapse into administration of Britishvolt last week.
The firm had planned to build a giant factory to make electric car batteries in Cambois, near Blyth in Northumberland, but the project ran out of money.
Car firms warn that the UK is lagging behind other countries, particularly on offering state aid to manufacturers.
The boss of the SMMT, Mike Hawes, conceded that the UK could be in the unenviable position of offering less support to crucial industries than before it left the EU.
Economy concerns
Data out on the UK economy in recent weeks has painted a mixed picture.
Price rises in the UK slowed for a second month in a row in December, but the cost of food including milk, cheese and eggs kept inflation at a 40-year high.
Meanwhile, wages have grown at the fastest rate in more than 20 years, but are still failing to keep up with rising prices.
Figures on Tuesday showed government borrowing hit a new high in December, driven by the cost of supporting households with their energy bills and rising debt interest costs.
And on Wednesday, the independent Office for Budget Responsibility told the government that it had overestimated the prospects for medium-term growth and that it planned to downgrade its outlook, The Times reported.
The downgrade would leave Mr Hunt with less room to manoeuvre ahead of his Budget this March.
