Chancellor Hunt Says UK Is on Track to Halve Inflation This Year

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(Bloomberg) — The UK government is still on track to achieve its pledge to halve record inflation this year and will do what it takes to fix the nation’s crumbling schools, Chancellor Jeremy Hunt said. 

The government was “taking the right decisions for the long-term of the British economy,” Hunt said on the BBC’s Sunday With Laura Kuenssberg show. “That’s what we’re doing and we can see the plan is working.” 

Hunt made the comments after publishing a statement ahead of Parliament’s return on Monday, saying the government will achieve its goal to get the inflation rate to about 5% by year end. 

A surge in consumer prices after the Covid pandemic and the outbreak of the war in Ukraine pushed the inflation rate to a four-decade high of 11.1% last year. Prime Minister Rishi Sunak has pledged to cut inflation to around 5% this year, one of the key promises he said voters should judge his government on when they go to the polls in elections due by January 2025. The rate is currently 6.8% and there could a further “blip,” before falling to the target at year end, Hunt told the BBC.

In its August monetary policy report, the Bank of England said prices were still “too high.” While the central bank does forecast annualized inflation falling to at about 5% by year-end, that’s still far above its 2% target. 

 

Read more: Why UK Inflation Is So High and Tough to Bring Down

Hunt signaled the government still wants to cut record-high tax rates, but that can only be financed by boosting economic growth and improving government efficiency. Hunt did get some good economic news last week when the statistics office revised growth figures to show the UK had pulled ahead of Germany in its recovery from the Covid-19 pandemic, with the economy expanding 8.7% in 2021, better than the 7.6% initially reported. 

“We are utterly focused on growing our economy,” he said, adding that the post-pandemic recovery in the UK was also better than in France, Italy and Japan. “You will hear lots more about this in the months that come ahead after we have dealt with inflation, which is a primary task.”

Hunt urged the restart of a public sector reform to boost efficiency as the government has worked to identify over the summer how much time public servants — police officers, doctors and teachers — spend on administrative tasks. 

Hunt was also questioned about the government’s ability to safeguard public buildings after the discovery of crumbling concrete forced the closure of 100 schools last week, just before the start of the new academic year. More schools and other public buildings like hospitals could also be affected. 

The shutdowns underline the scale of the challenge facing Hunt and Sunak over public services, as they attempt to turn around a narrative of decline under the Conservative Party, which has held power for 13 years.

Rear More: School Buildings in England Ordered to Shut Over Concrete Flaw

“We will spend what it takes to make sure that children can go to school safely, yes, and parents should know that,” he said on the BBC. “They should also know that we won’t take any risks with their children’s safety.”

 

(Updates with comments from BBC interview throughout.)

©2023 Bloomberg L.P.





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