British finance minister Jeremy Hunt promised on Friday to tackle the country’s weak productivity with post-Brexit reforms to boost growth, but signalled that he would stick to tax rises that have angered some lawmakers in his Conservative Party.
Hunt, who steadied financial markets after the turmoil of former Prime Minister Liz Truss’ “mini-budget” in September last year, is preparing to announce a plan for growth in a budget statement in March.
On Friday he countered talk of Britain’s economic decline and focused on growth industries, including digital technology and the shift to new, high value industries such as renewable power and advanced manufacturing.
“The best tax cut right now is a cut in inflation,” he said, adding that Britain needed to use its departure from the European Union as a catalyst to reform the country’s economy and make it more productive.
Hunt’s comments come days after the head of the Confederation of British Industry warned that Britain had been “spectacularly overlapped and overtaken” on green investment.
“Confidence in the future starts with honesty about the present, and we should not shy away from the biggest challenge we face which is our poor productivity,” Hunt said in a speech at Bloomberg in London.
“Our plan for long-term prosperity tackles that challenge head on. It is a plan necessitated, energised and made possible by Brexit which will succeed if it becomes a catalyst for the bold choices we need to take.”
Hunt said declinist talk did not reflect the fact that Britain’s economy had grown by more than France and Germany since 2010.
More recent comparisons are less favourable: official data show Britain is the only Group of Seven economy that failed to recover its pre-pandemic size by the third quarter of 2022.
Hunt said he wanted Britain to host the most competitive tax regime of any major country – but that sound money should come first. He also called for public spending restraint.
Tackling high inflation was a top priority, Hunt said.