Chancellor of the Exchequer Rishi Sunak said that Britain's economic recovery from the Covid-crisis is not guaranteed as he warned of the risks of rising interest rates and inflation on public debt.
Mr Sunak, who was speaking on the eve of opening the new UK Infrastructure Bank in Leeds on Wednesday, which aims to help deliver the country's climate ambitions while boosting jobs and growth, said he hoped Britain was over the worst but he was still focused on securing the future.
“Hopefully we’re through the crisis phase of this,” he told GB news in a television interview.
“I’ve got one eye on the future, I want to make sure we’re protected against risk.”
He said he would “invest in our children’s future, not have them paying for the spending of the past”.
Mr Sunak said rising prices are one of his near-term concerns, as UK inflation surged unexpectedly by 2.1 per cent on Tuesday, past the Bank of England’s target for the first time in almost two years.
However, he said there was no sign that expectations for higher inflation were becoming entrenched as the economy bounces back from its coronavirus lockdowns.
"That's different to what's happening in the US so I think actually here, people's expectation is inflation will remain at target over the medium term, but of course that's one of the many risks that it's my job to worry about," Mr Sunak said.
“As interest rates and inflation change, that has an impact on our debt.”
The government has spent heavily over the past year on job support and health measures to prop up the economy during the crisis and prevent unemployment from soaring out of control.
Borrowing in the 2020/21 financial year hit £300.3bn, or 14.3 per cent of annual economic output, the highest share on this measure since the end of the Second World War.
However, with the country still governed by Covid-19 movement restrictions, borrowing in 2021-22 is still expected to total more than £200bn, or 10 per cent of GDP, with Mr Sunak under pressure to deliver on his pledge to balance day-to-day spending and revenue by the middle of the decade without further tax increases.
Pressed on how he might raise extra revenue to close Britain’s deficit, Mr Sunak repeatedly declined to commit to maintaining the government’s “triple lock” policy on pensions.
Introduced by the Conservatives in 2010, it is a guarantee to raise the state pension by the highest of three measures: annual growth in average earnings, inflation, or 2.5 per cent.
The latest figures show average wages grew 8.4 per cent in the 12 months to April as millions of employees returned to work, which means that could be to used to calculate the state pension next year at a cost to the Treasury of £7bn.
Mr Sunak said there would be a statutory review of the policy in the Autumn and that it remains the government’s position for now, though he refused to comment on future spending decisions outside of fiscal events such as a budget or spending review.
The finance minister also said there would be would be no return to austerity after he spent £350bn on Covid support during the pandemic.
However, he said he wanted to protect the country against shocks ahead and not leave Britain's debt to be paid for by future generations
"That does require a bit of focus and prioritisation," Mr Sunak said.
Mr Sunak’s interview was recorded the night before he opened the UK Infrastrucuture Bank (UKIB) which aims to accelerate investment into infrastructure projects, cut emissions and support the government’s bid to level up every part of the UK economy.
Mr Sunak said the bank will help the government invest billions of pounds ”in world class infrastructure” that will support people, businesses and communities across the country.
While the chancellor acknowledged that tackling climate change would expensive with “costly transitions”, he said the future green economy will also offer “opportunities” with the government committed in investing to ensure people are supported through the transition.
In his March budget, Mr Sunak said UKIB would support regional economic growth and help eradicate the north-south divide in Britain.
The bank will receive an initial £12 billion of capital and £10bn in government guarantees, with hopes it will help to unlock more than £40bn of private sector investment.
The lender’s £22bn of financial capacity will allow it to issue loans, equity and guarantees on private projects with plans to ramp up its lending over time to local authorities.
It is part of the government’s plan to deliver more than £600bn in gross public sector investment over the next five years, the highest level as a proportion of GDP since the late 1970s.
Chris Grigg, chair of the UKIB said the bank will be “a catalyst for investment to support regional economic growth and net zero ambitions”.
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The years Ramadan fell in May
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
The biog
Age: 32
Qualifications: Diploma in engineering from TSI Technical Institute, bachelor’s degree in accounting from Dubai’s Al Ghurair University, master’s degree in human resources from Abu Dhabi University, currently third years PHD in strategy of human resources.
Favourite mountain range: The Himalayas
Favourite experience: Two months trekking in Alaska
10 tips for entry-level job seekers
- Have an up-to-date, professional LinkedIn profile. If you don’t have a LinkedIn account, set one up today. Avoid poor-quality profile pictures with distracting backgrounds. Include a professional summary and begin to grow your network.
- Keep track of the job trends in your sector through the news. Apply for job alerts at your dream organisations and the types of jobs you want – LinkedIn uses AI to share similar relevant jobs based on your selections.
- Double check that you’ve highlighted relevant skills on your resume and LinkedIn profile.
- For most entry-level jobs, your resume will first be filtered by an applicant tracking system for keywords. Look closely at the description of the job you are applying for and mirror the language as much as possible (while being honest and accurate about your skills and experience).
- Keep your CV professional and in a simple format – make sure you tailor your cover letter and application to the company and role.
- Go online and look for details on job specifications for your target position. Make a list of skills required and set yourself some learning goals to tick off all the necessary skills one by one.
- Don’t be afraid to reach outside your immediate friends and family to other acquaintances and let them know you are looking for new opportunities.
- Make sure you’ve set your LinkedIn profile to signal that you are “open to opportunities”. Also be sure to use LinkedIn to search for people who are still actively hiring by searching for those that have the headline “I’m hiring” or “We’re hiring” in their profile.
- Prepare for online interviews using mock interview tools. Even before landing interviews, it can be useful to start practising.
- Be professional and patient. Always be professional with whoever you are interacting with throughout your search process, this will be remembered. You need to be patient, dedicated and not give up on your search. Candidates need to make sure they are following up appropriately for roles they have applied.
Arda Atalay, head of Mena private sector at LinkedIn Talent Solutions, Rudy Bier, managing partner of Kinetic Business Solutions and Ben Kinerman Daltrey, co-founder of KinFitz
