Chamber News
The chancellor and PM are facing "sober" decisions on potential spending cuts and tax rises
31 October 2022 • Sarah Medcraf
The chancellor and PM are facing "sober" decisions on potential spending cuts and tax rises.
In a meeting on Thursday (27th October), they were told that economic growth is forecast to be considerably lower than the last independent forecast.
This means they have a bigger financial "hole" to fill.
An announcement on the plans has been pushed back by more than two weeks to 17 November.
The Treasury would not put a figure on how much the chancellor and prime minister will need to find in the budget next month but the BBC is told it may need to be at least £50bn.
Multiple sources said the amount of money the government needed to raise through spending cuts and tax rises was also more than just this current "hole" in its finances.
This, they said, was because the government needed some "headroom" beyond just getting their existing debt down in case the economy does not grow as much as expected.
And because spending cuts and tax rises in this budget could reduce future economic growth, and therefore future tax revenues, money would be needed to recover that in future.
While government borrowing costs have fallen somewhat in recent days, officials warned Mr Hunt and Mr Sunak that they remain considerably elevated as global interest rates also rise.
For example, the interest rate - or yield - on 10-year UK government debt is just over 10 basis points higher than before the mini-budget.
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