London: Britain’s Treasury chief pledges to respond to Russia’s war in Ukraine and a cost-of-living crisis hitting working families while delivering his spring budget statement on Wednesday.
Rishi Sunak did not offer details on specific policy proposals but said Britain would continue its “unwavering” support for Ukraine and seek to strengthen the domestic economy to counter the threat posed by Russian President Vladimir Putin.
“So when I talk about security, yes, I mean responding to the war in Ukraine,” Sunak said in remarks released ahead of the statement.
He added that he “also mean the security of a faster-growing economy, security of more resilient public finances, and security for working families as we help with the cost of living”.
Sunak has come under increasing pressure to announce further measures to help consumers facing what one economist has called “the biggest year-on-year fall in household incomes in a generation”.
Utility bills are set to rise by more than 50 per cent in April, on top of a planned income tax increase and an acceleration of consumer prices for everything from fuel to food at the fastest pace in decades.
Some politicians also are calling for increased defence spending amid rising tensions between NATO and Russia due to the conflict.
The spring statement Sunak will deliver to the House of Commons is a midyear update on public finances that often includes policy announcements responding to new challenges facing the government.
The economic and security picture look much bleaker now than when Sunak released his budget in October.
Economists now estimate inflation will peak at close to 9 per cent this year — double the 4.4 per cent forecast government advisers made in October — as the war in Ukraine boosts food and energy prices.
Accelerating inflation is also likely to curtail economic growth and squeeze government finances, with economists forecasting that gross domestic product will grow less than 1 per cent next year, compared with the 2.1 per cent forecast by the Office of Budget Responsibility when Sunak released his fall budget.
Politicians and consumer advocates have suggested that the government could help ease the cost-of-living crisis by delaying a planned 1.25 per cent income tax increase set to take effect next month.
Other suggestions include cutting taxes on gasoline and diesel fuel, raising benefits for low-income households, and doing more to help people pay utility bills that are set to rise by 54 per cent next month because of the soaring costs of natural gas.
But the gloomier economic outlook means Sunak will have little room to maneuver, according to Paul Johnson, director of the Institute for Fiscal Studies, an economic think tank.
“Whatever he does, we can be sure that it won’t be enough to insulate all of us from all of the pressures on our budgets. And I think he is likely to be gloomily honest,” Johnson wrote on Sunday.
“World events have made us poorer. No chancellor can wave a magic wand and protect us from that reality for ever.”
