Sam Blewett, PA Deputy Political Editor, flying with the Prime Minister to Tokyo
Wed, 17 May 2023 at 5:00 pm BST
Rishi Sunak has insisted he will bring down taxes when inflation cools and claimed the economy is defying expectations after economists said one in five people will be paying the higher rate of tax under his policies.
The Prime Minister said the nation’s finances are receiving boosts from the departure from the EU, dismissing Nigel Farage’s declaration that “Brexit has failed”.
Mr Sunak faces pressure from Brexiteers to seize on the ability to deregulate the economy, slash taxes and scrub laws written in Brussels from the statute book.
But he majorly downgraded the promised legislative “bonfire” before the Institute for Fiscal Studies (IFS) projected that 7.8 million people will be paying income tax at 40% or above by 2027-28.
Speaking to journalists travelling with him to a G7 summit in Japan, Mr Sunak said: “Right now we’re grappling with high inflation and elevated borrowing and it is responsible to deal with that first.
“Once we have reduced inflation and brought borrowing under control I would very much like to be able to reduce the tax burden.”
As millions suffer under a cost-of-living crisis, the Prime Minister expressed optimism about the economy after the Bank of England stopped forecasting that the UK will enter a recession this year.
“The IFS will make its own estimates. What I would say is recently we’ve seen massive upgrades in our growth forecasts from a range of different people, whether that’s the Bank of England and others including the IFS previously,” Mr Sunak said.
“You can see that in surveys from CFOs (chief financial officers) and other things – economic optimism is increasing, consumer confidence is increasing, growth estimates are being raised.”
He argued that the Office for National Statistics figures on disposable income are “hugely outperforming what people thought”.
“So I think there are lots of signs that things are moving in the right direction,” he added.
This week Mr Farage, the prominent Leave campaigner, said the country had “not actually benefited from Brexit economically”.
He blamed the Conservatives for mismanaging the economy, adding: “Brexit has failed.”
But Mr Sunak insisted he is “actually delivering the benefits of Brexit as opposed to just talking about it”.
The Prime Minister said he has commissioned freeports, cut VAT on sanitary products, reformed alcohol duties and was culling hundreds of EU-era laws.
“These are not small things and they come on top of all the other things. I feel pretty confident that we are delivering the benefits of Brexit from an economic perspective, the track record is very clear on that,” he said.
After a lengthy response, Mr Sunak said he was “glad to get that off my chest”.