British Prime Minister Rishi Sunak has said that this week's autumn budget will deliver on market expectations, as his Chancellor warned everyone will need to pay “a bit more tax” to stabilise the economy.
Mr Sunak said measures to be unveiled on Thursday by Jeremy Hunt would “put our public finances on a sustainable trajectory” after investors were unnerved by his predecessor’s £45 billion ($53bn) tax-cutting bonanza.
It is expected the statement will include painful public spending cuts and tax rises to fill a gap in the nation’s finances.
Mr Hunt earlier said sacrifices were required across the board to get the economy back on track.
But the planned tax rises have drawn criticism from some quarters of the Conservative Party, with former levelling up secretary Simon Clarke calling for the books to be balanced through spending cuts.
Former chancellor Kwasi Kwarteng, whose mini-budget was estimated by economists to have cost the country as much as £30bn, said growth would not come from “putting up our taxes”.
Rishi Sunak wins battle to become UK prime minister - in pictures
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Britain's new Prime Minister Rishi Sunak delivers a speech outside Number 10 Downing Street. Reuters -
King Charles III invites Mr Sunak to become prime minister and form a new government in an audience at Buckingham Palace. PA -
Mr Sunak promised to bring stability amid what he called a “profound economic crisis”. PA -
The new prime minister is applauded as he enters Number 10. Photo: Simon Walker/ No 10 Downing Street -
Mr Sunak is greeted by Cabinet Secretary and Head of the Civil Service Simon Case as he enters 10 Downing Street. AFP -
A worker loads a removal van with boxes outside 10 Downing Street. Reuters -
Members of the public wait for the arrival of Mr Sunak near Downing Street. AP -
Staff in the Foreign and Commonwealth Office watch from the windows as Mr Sunak arrives in Downing Street. PA -
An Indian artist in Mumbai creates a painting to congratulate Mr Sunak on becoming prime minister. EPA -
Mr Sunak arrives at Buckingham Palace. PA -
Incoming prime minister Rishi Sunak arrives at the Conservative Party's headquarters with a wave. AFP -
Rishi Sunak is greeted by colleagues upon his arrival. AFP -
Conservative MPs applaud as Rishi Sunak arrives. Reuters -
Rishi Sunak departs after making a statement inside the Conservative Party's headquarters. PA -
Mr Sunak meets the 1922 Committee in Parliament after he was announced as the new leader of the Conservative Party when Penny Mordaunt dropped out. PA -
Sir Graham Brady, chairman of the 1922 Committee, announces Mr Sunak as the new leader of the Conservatives and therefore the prime minister. PA -
Members of the media work outside No 10 Downing Street, the official residence of Britain's prime minister, in central London, as they await announcements. AFP -
Mr Sunak leaves his campaign office in London. AP -
A billboard of Liz Truss, the departing prime minister, in London. Bloomberg -
Members of the public look through the gates into Downing Street. Reuters -
Mr Sunak leaves his home in London on Monday morning. AFP -
Leader of the House of Commons and Conservative leadership candidate Penny Mordaunt speaks to the media on Sunday. Ms Mordaunt pulled out of the race moments before the deadline for nominations. PA
On the plane to Indonesia for the G20 summit, Mr Sunak said financial conditions in the UK had “clearly” steadied.
“But they have stabilised because people expect the government to take the decisions that will put our public finances on a sustainable trajectory, and it’s the government’s job to deliver on that,” he said.
“And that’s what the Chancellor will do.”
Mr Sunak said he recognised the dire economic situation the country was facing, after gross domestic product contracted by 0.2 per cent between July and September, potentially marking the start of a recession.
He stressed the importance of “delivering on the expectations of international markets” to “make sure that our fiscal position is on a more sustainable trajectory”.
Rishi Sunak through the years - in pictures
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British Prime Minister Rishi Sunak announces July 4 as the date for the 2024 general election at No 10 Downing Street. Here, The National looks back at his political career. Getty Images -
Mr Sunak during local election campaigning in Teesside in May 2024. Getty Images -
Mr Sunak presents cupcakes to journalists on board a plane on the way to Warsaw in April 2024. Getty Images -
Mr Sunak during a press conference in Downing Street in January after the Safety of Rwanda Bill passed its third reading in the House of Commons. Getty Images -
Being applauded after his speech at the Conservative Party conference in October 2023. Getty Images -
Looking pensive alongside then-home secretary Suella Braverman at No 10 in October 2023. She didn't last much longer in the cabinet. Getty Images -
Mr Sunak sits in an old Special Branch police vehicle which was used to transport former prime minister Margaret Thatcher, in July 2023. Getty Images -
On board Border Agency cutter HMC Seeker during a visit to Dover in June 2023. Getty Images -
Mr Sunak alongside European Commission President Ursula von der Leyen, Canada's Prime Minister Justin Trudeau, US President Joe Biden, French President Emmanuel Macron and German Chancellor Olaf Scholz during the G7 Summit in May 2023. Getty Images -
Mr Sunak and his wife Akshata Murty arriving in Japan ahead of the G7 Summit in May 2023. Getty Images -
Mr Sunak and Chancellor Jeremy Hunt sending a message at Accrington Market Hall in January 2023. Getty Images -
Mr Sunak and Ukrainian President Volodymyr Zelenskyy meet in Ukraine's capital Kyiv in November 2022. Getty Images -
King Charles III welcomes Mr Sunak during an audience at Buckingham Palace, where he invited the newly elected leader of the Conservative Party to become Prime Minister and form a new government in October 2022. Getty Images -
Mr Sunak makes a statement outside No 10 in October 2022 after taking office. Getty Images -
Mr Sunak arrives inside Number 10 in October 2022. Photo: Simon Walker/ No 10 Downing Street -
Greeted by colleagues at Conservative Party HQ after having been announced winner of the leadership contest in October 2022. Getty Images -
Mr Sunak at Westminster Hall in London following the death of Queen Elizabeth II in September 2022. PA -
Mr Sunak visits his family's old business, Bassett Pharmacy, on the campaign trail in August 2022. Getty Images -
Mr Sunak looks at an NLAW anti-tank launcher during a visit to the Thales Defence System plant in Belfast in August 2022. Getty Images -
At a hustings event in Exeter in August 2022. Getty Images -
Celebrates England's first goal as he watches the Women's Euro 2022 final in Salisbury in July 2022. Getty Images -
Mr Sunak and Ms Truss take part in the BBC Leadership debate at Victoria Hall, Hanley, in July 2022. Getty Images -
With daughters Krisna and Anoushka and wife Akshata Murthy in July 2022. Getty Images -
Opening the Great Ayton Village Fete during the queen’s Platinum Jubilee celebrations in June 2022. Getty Images -
Mr Sunak and Ms Murthy speak to then-Prince Charles at a British Asian Trust event in February 2022. Getty Images -
Mr Sunak arrives at COP26 in Glasgow in November 2021 when he was chancellor. Getty Images -
Holding the budget box as he departs 11 Downing Street to deliver his Autumn Budget in October 2021. Getty Images -
At a press conference on the 2021 Budget in London in March 2021. Getty Images -
With former prime minister Boris Johnson during a visit to PD Ports on the River Tees in March 2021. Getty Images -
Mr Sunak poses with the budget box at 11 Downing Street in March 2021. Getty Images -
Meeting staff back at work after being furloughed at Hamleys toy shop in London, December 2020. Photo: HM Treasury -
Mr Sunak visits the Imperial Clinic Research Facility at Hammersmith Hospital, London, in November 2020. Getty Images -
Lighting a candle for Diwali on Downing Street, November 2020. Getty Images -
Working on a speech in his flat above 11 Downing Street in November 2020. Photo: HM Treasury -
Mr Johnson and Mr Sunak visit the headquarters of Octopus Energy in London in October 2020. Getty Images -
With his 'Winter Economy Plan' outside 11 Downing Street in September 2020. AFP -
Decorating a plate at Emma Bridgewater pottery in Stoke pottery in September 2020. Getty Images -
Promoting 'eat out to help out' on the Isle of Bute, Scotland, in August 2020. Getty Images -
A member of the public takes a selfie with Rishi Sunak during a visit to Scotland in August 2020. AFP -
Visiting a Wagamama restaurant in central London in July 2020. Photo: HM Treasury -
Rishi Sunak visits a Pret A Manger in Westminster in July 2020. HM Treasury -
With Mr Johnson at his first Cabinet meeting after a reshuffle at 10 Downing Street in February 2020. Getty Images -
Mr Sunak speaks during a general election debate in Cardiff in November 2019. Getty Images
Mr Sunak said the plan was to “lay the foundations” for growth so taxes could be cut “over time”.
“The Chancellor has also said that part of our job is not just to bring stability back to the system, which we will do, but it’s also to lay the foundations for the economy to recover and grow,” he said.
“That’s how we’re going to be able to cut people’s taxes over time and support public services. And you’ll hear that side of the equation from the Chancellor as well.”
Mr Sunak will return to the UK from the gathering of the leaders of major economies in Bali just in time for the budget on Thursday.
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Mr Hunt has said “people with the broadest shoulders will bear the heaviest burden” as he is understood to be considering a cut to the threshold at which the highest earners start paying the top rate of tax.
The Resolution Foundation think tank’s economists estimate that former prime minister Liz Truss and Mr Kwarteng blew £20bn on unfunded cuts to national insurance and stamp duty, with a further £10bn lost to higher interest rates and government borrowing costs, The Observer reported.
At the G20 summit, Mr Sunak evaded questions about whether that figure was correct and whether he would use the UK’s recent experience as a lesson in how things could go wrong.
“I think I said on the steps of Downing Street that mistakes were made and part of the reason I became prime minister was to fix that,” he said.
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He pointed to global economic challenges such as soaring inflation after the Covid pandemic and Russia’s invasion of Ukraine.
“Those are shared challenges and what I’ll be talking about at the G20 with other leaders is what everyone is doing in their own countries and internationally to ensure resilience and stability in the financial system.”
