Jeremy Hunt looks like a lucky man.
The latest public sector net borrowing figures for December were well below the Office for Budget Responsibility’s forecasts, and much lower than the borrowing in the same month a year before and the lowest in any December since pre-pandemic.
The Chancellor is lucky because the fall to £7.8billion – some £8.4billion less than in the same month a year ago – was driven mainly by lower inflation-related interest payments because of a fall in the Retail Price Index.
Higher VAT and income tax revenue – because of the freeze on personal tax thresholds dragging more people into higher bands – as well as lower spending, also reduced the monthly debt.
What will Hunt do with his good fortune? Although the public finances remain strained, he may well have wiggle room of around £20billion with which to play in his spring budget on March 6 without busting the fiscal rules.
Too little, too late? Chancellor Jeremy Hunt (pictured) has indicated he is planning a package of tax cuts
Hunt has already indicated he is planning a package of tax cuts. But what he cuts and how will rest on his motive.
Does he go for a short-term pre-election crowd-pleasing gimmick like trimming income tax by a penny?
Or does he opt for tax cuts to revive the broader economy and growth, like slashing corporation tax?
As the Budget is the last big fiscal event ahead of the next election, and with poll after poll showing the Tories will be crushed, there is enormous pressure from his Cabinet colleagues to go for the crowd-pleaser.
That would suggest the more popular cuts to income tax or fuel duties.
Instead, Hunt should go for broke and be bold.
Slash stamp duty to bring first-time buyers into the housing market, put a bomb under planning laws and scrap all the ridiculous anomalies such as those affecting families receiving child benefit and the 45 per cent tax band.
If he wants to be remembered for growth, the obvious move is to slash corporation tax to 19 per cent.
Doug McWilliams, co-chairman of the Growth Commission, argues this will do more to kick-start growth than any other measure.
It shouldn’t be hard for Hunt – those with long memories will remember that when he stood for the leadership one of his main pitches was hacking corporation tax down to 15 per cent. That does seem a long time ago.
Yet unfortunately, it is more likely that Hunt’s luck proves illusory.
Even the most radical of tax cuts are unlikely to make a jot of difference to the public after 13 years of the tax-hiking Tories.
Voters are smart enough, and cynical enough, to see that any cuts would be nothing more than the Tories indulging in a last-gasp death bed repentance.
Too little, too late.
Fresh air
The bosses of two of the world’s biggest companies are at last admitting the truth about the complexity of renewables.
First was Joe Kaeser, chairman of the supervisory board Siemens Energy, who warned at Davos that energy bills will keep rising to pay for the green transition as he attacked ‘fairytale’ thinking about net zero.
Kaeser said manufacturers will continue to face huge losses during the harmful ‘rat race’ to make ever bigger turbines.
And it is the customer who will pay while governments and developers were in denial about the costs.
The second red flag comes from Toyota chairman, Akio Toyoda, who has made the starkest of warnings that battery-powered electric vehicles will never dominate the market, and will only ever make up 30 per cent of global sales.
What’s more, Toyoda, whose grandfather founded Toyota nearly a 100 years ago, said fuel-burning engines as well as hybrids and those powered by hydrogen fuel cells will continue to play big roles in the future.
BEVs are not the answer, he said, as more than a billion people live around the world without electricity.
Which is why engine cars will be roaring for some time to come.
Well said. More of this fresh air please.
Sequins galore
Rita Ora brought her Hot Right Now magic to Primark, helping sell masses of sequinned tops over Christmas.
Like M&S and Next, Primark enjoyed a good Christmas as shoppers splashed out on clothing and food.
Yet the 3.2 per cent drop in retail sales for December tells a very different story, so watch out for more dismal results from non-food retailers, particularly those in consumer and electrical goods.
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