Jeremy Hunt, the chancellor, is trying to meet Mr Sunak’s stated target of halving inflation by 2023 – making that the immediate focus rather than reducing the tax burden, which is at a 70-year high.
Figures in both No. 10 and No. 11 doubled from the approach in recent weeks, reiterating Mr. Sunak’s argument that lower inflation would help economic growth.
But pressure from some backbench Tories to cut taxes is already starting to emerge ahead of the Budget.
In parliament on Wednesday night, two dozen supporters of Ms Truss gathered to form what was dubbed the “Conservative Growth Caucus”.
Mrs Truss, the former prime minister, attended herself, although she did not make a speech. The group met in the office of Simon Clarke, former community secretary.
One former senior minister in attendance insisted it was “not an official event” but a casual drinks party that doubled as a “conversation on the importance of growth”.
“I feel really strongly that we shouldn’t lose sight of why we need some growth in the economy,” the former minister said. “If we don’t have growth, we can’t invest.
The dismantling of Ms Truss’s economic program in the autumn, which led to a spike in interest rates, saw Mr Sunak rise to No 10 and focus on reducing inflation.
But the creation of the group and an indication from Truss’ allies that her supporters are ready to continue fighting for the tax-cut principles she has championed in the coming months.
Budget decisions are still many weeks away, with the Treasury just beginning the process. Yet the mood music of the new year is already becoming apparent, with the prospect of tax cuts downplayed.
A Treasury insider told The Telegraph: “High inflation is slowing growth, eating into wages and causing strikes – we need to halve it this year.
“If we deviate from the plan, we risk permanently introducing higher prices into the economy, prolonging the pain for everyone.” The sooner we get inflation down, the better.”
Big government ruins the economy
By Sir James Dyson
It is a measure of our political malaise that the Prime Minister recently declared that it was a “big risk” for a politician to say that “change requires sacrifice and hard work”.
That he thought it dangerous to state something so obvious is very telling. Hard work and sacrifice should be vote-winners, not electoral liabilities. But growth has become a dirty word and an idea too risky to consider.
This helps explain why our economy is stagnant and why, on current trends, the average British family will be poorer than their Polish counterpart by 2030. We can turn things around, but only if fast-growing companies are allowed to thrive here . And we’ll have to act fast – it’s a global race and our competitors are hungry.
Government has a role to play. Starting with the spring budget in March, he must boost private innovation and demonstrate his ambition for growth.
There are around 33 million jobs in the UK, of which 27 million are in the private sector. Yet all too often it is the private sector that is disadvantaged and targeted to foot ever-higher tax bills, ranging from a whopping 32 per cent rise in corporation tax, a 13.8 per cent employer national insurance rate, to the perception of the new Organization for Economic Co-operation and Development Global Minimum Tax Rate – which targets foreign profits, many of which stimulate domestic investment and growth. No wonder the US is freezing.
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