The chancellor declared Britain ‘has done the hard yards’ and the economy is ‘bouncing back,’ and said he aims to eventually abolish National Insurance.
Jeremy Hunt declared on Friday that he’s “ready to cut taxes and bet on growth” after the UK’s gross domestic product (GDP) grew again in February.
The chancellor made the remark as he said Britain has now “done the hard yards on inflation.”
The Office for National Statistics (ONS) said on Friday that monthly GDP is estimated to have grown by 0.1 percent in February, following a 0.3 percent growth in January, setting Britain on the course of recovery from a technical recession.
Writing in the Daily Express, Mr. Hunt said the figures showed that “the economy is bouncing back.”
“Today, it was confirmed that the economy grew in January and February. And the positive economic data we’ve been seeing recently shows that Britain is back in business,” he wrote.
“Inflation has been slashed, from over 11 [percent] to 3.4 [percent]. And it’s on track to fall to 2 percent next month, something predicted by economists at the Bank of England,” he added.
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The chancellor said it’s the Conservative’s “long-term ambition” to abolish National insurance contributions (NICs) and end “the unfairness of the double tax on work.
“And as inflation falls further, the handbrake which is holding back growth will be released, setting off sustainable growth that leaves people feeling better off and secures funding for public services,” he added.
The chancellor defended his decision of not cutting taxes earlier, saying, “The hard yards getting inflation down will be worth it.”
Inflation shot up between 2021 and 2022 because of a combination of factors including the pent-up demand during COVID-19 lockdowns and Russia’s invasion of Ukraine, from 0.4 percent in February 2021 to a peak of 11.1 percent in October 2022.
Mr. Hunt has been taking a cautious approach, saying he wants to reduce the tax burden and boost growth, but not before inflation is brought down.
The UK fell into a technical recession in the second half of last year, when GDP decreased for two quarters in a row, leaving Prime Minister Rishi Sunak with a challenge to reassure voters that the economy is safe with him before an election expected later this year.
GDP figures released on Friday confirmed the UK’s economy started 2024 on a stronger footing, with the three-month average growth rate rising to 0.2 percent in February from zero in January—the highest such reading since August.
The ONS said Britain could now escape recession even if GDP contracts sharply in March by around 1 percent—assuming there are no revisions to prior months’ data.
The figures are also likely to reinforce the Bank of England’s cautious tone around the prospect for interest rate cuts, with the economy on track to slightly exceed the central bank’s expectation for a 0.1 percent expansion in the first quarter.
The ONS has also said CPI inflation in February was 3.4 percent.
The Bank of England has projected that CPI inflation will drop to around its target level of 2 percent in the second quarter this year, before bouncing slightly to 2.25 percent and 2.75 percent in the two subsequent quarters.
The chancellor said Friday’s GDP figure is “a welcome sign that the economy is turning a corner,” while Labour said Britain was worse off with low growth after 14 years of Conservative government.
Chris Summers and Reuters contributed to this report.
