Rishi Sunak Forecasts Increased Efficiency And Tax Reductions, Denies Austerity Claims: 'Simply Unfounded'

UK Prime Minister Rishi Sunak has reassured the public that his financial plans will not lead to austerity. This comes despite concerns raised by the fiscal watchdog about the potential impact of his tax-cutting strategy on public services.

In a recent interview with Bloomberg TV, Sunak refuted claims of impending austerity measures. He emphasized his government’s commitment to enhancing public sector efficiency and prioritizing tax cuts.

"Any commentary or accusation that's what's happening is just simply unfounded," he said.

This comment was made ahead of the Global Investment Summit in London, where the government pledged a new investment of £29.5 billion ($37.2 billion).

Despite this fiscal injection, at least £10 billion ($12.6 billion) had already been previously announced. Sunak’s denial of austerity comes amid criticism of further expenditure cutbacks, following Chancellor Jeremy Hunt’s revelation of £21 billion ($26.4 billion) in business and personal tax reductions last week.

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The Office of Budget Responsibility highlighted that these tax reductions were predominantly funded by a £19 billion (approx. $24 billion) decrease in government spending’s real value post the next general election. The Institute for Fiscal Studies categorized these spending cuts as “questionable, if not plain implausible.”

In his interview, Sunak confessed to plans to reduce state spending to enable tax cuts. He further emphasized that the current trajectory is towards more cuts. The interview disclosed that a significant real-terms fall in departmental budgets up to 2027-28 has been accounted for, approximating around £22 billion ($27.7 billion).

The shift towards tax reduction appears to be a political maneuver, as the Conservative Party is under pressure to decrease the overall burden. The tax reduction is also viewed as a strategy to mitigate the rising cost of living, a worry that could potentially influence the party’s performance in the forthcoming general elections.

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