Rishi Sunak gives fresh hint of looming tax rises saying letting UK’s huge borrowing carry on would be ‘morally, economically and politically’ wrong
- Rishi Sunak has warned about dangers of accepting borrowing as fact of life
- The Chancellor said it would be ‘morally, economically and politically’ wrong
- Comments are the latest hint of tax hikes and spending cuts after crisis passes
Rishi Sunak has given a fresh hint at looming tax rises warning that letting huge borrowing carry on would be ‘morally, economically and politically’ wrong.
The Chancellor said failing to tackle the structural deficit created by the coronavirus turmoil would leave the UK exposed to ‘future shocks’.
In an apparent shot across the bows at Boris Johnson’s free-spending instincts, he also cautioned that it could be catastrophic for the Conservatives as there would not be ‘much difference between us and the Labour Party’.
The intervention came in an end-of-year interview with the Spectator magazine.
Chancellor Rishi Sunak (pictured last month) said failing to tackle the structural deficit created by the coronavirus turmoil would leave the UK exposed to ‘future shocks’
Government borrowing could be close to £400billion this year and is set to continue at eye-watering levels into the mid-2020s, as this OBR chart shows
Asked about the huge scale of borrowing – which could be close to £400billion this year and is set to continue at eye-watering levels into the mid-2020s – Mr Sunak said it was not enough to rely on interest rates staying at historic low levels.
‘It is not sustainable to borrow at these levels. I don’t think morally, economically or politically it would be right,’ he said.
Mr Sunak added: ‘Running a structural deficit years into the future, with debt rising?
‘That’s not building up the resilience you need to deal with the future shock that will come along, and someone else will be sitting in my chair.
‘We now have had two of these things in a decade: who knows what the next shock will look like?’
Laying out the political threat from continuing to run up the tab, the Chancellor said the Tories could not give the impression that ‘rising debt is fine.
‘If we think borrowing is the answer to everything, that debt rising is fine, then there’s not much difference between us and the Labour Party,’ he said.
‘I worry about what that means for us politically down the line.’
Referencing former Cabinet minister Lord Hague – whose Richmond constituency he inherited – Mr Sunak also suggested action will be needed well before the next election.
‘William Hague always tells me you can’t fatten a pig on market day,’ he said.
In an apparent shot across the bows at Boris Johnson’s free-spending instincts, Mr Sunak cautioned that accepting ongoing borrowing would mean there is not ‘much difference between us and the Labour Party’
Mr Sunak was also asked about the idea of a one-off wealth levy to fill the coronavirus black hole in the finances.
Last week the Wealth Tax Commission floated a 1pc tax spread over five years on those with personal wealth of more than £500,000, saying it could raise £260billion.
However, Mr Sunak sounded sympathetic to critics who warned it would punish asset-rich, cash-poor families and force house sales.
While admitting he had yet to read the report, the Chancellor said: ‘I think that’s right, in the sense that we’re a party that believes in aspiration.
‘Actually, we should be celebrating aspiration.’