Rishi Sunak may delay a fiscal announcement that is pencilled in for Halloween and will be designed to stop the markets going into another spiral, a senior minister has admitted.
Given that the new government has only just got up and running, James Cleverly, the foreign secretary, said it may no longer be possible to stick to that date for the statement, when major spending cuts and grim forecasts about the future of the economy are expected to be laid out.
The long-awaited statement was originally meant to be the former chancellor Kwasi Kwarteng’s chance to set out his medium-term growth plan, and it was brought forward by nearly a month after borrowing costs and currency exchange markets went haywire off the back of his mini-budget.
Though Kwarteng was sacked as Liz Truss tried to shore up her dying government, the new chancellor, Jeremy Hunt, promised he would stick to the timetable, viewed as vital to reassure the City that the exchequer could plug a fiscal black hole of about £70bn.
However, Cleverly suggested the date could be pushed back, saying it would not be a bad thing if the government had more time.
Asked if the government could delay the Halloween statement, he told BBC Radio 4’s Today programme: “It may well do. The prime minister’s only just stepped in. That date was set by the previous prime minister in the anticipation that she would be able to work throughout this period of time on that with the chancellor. Obviously things have changed.”
He acknowledged there needed to be certainty, and said the statement “may well still come on that day”. But Cleverly argued that if there was “a short delay, in order to make sure that we get this right, I think that that is not necessarily a bad thing at all”.
Hunt is understood to have spoken to the Bank of England governor on Tuesday about the importance of restoring confidence in the UK economy.
Inflation remained at a 40-year high of 10.1% in September, more than five times the Bank’s 2% target, putting pressure on it to raise interest rates further at the next meeting of its monetary policy committee on 3 November.
Sunak is likely to be asked at prime minister’s questions in parliament on Wednesday about the possibility of the Halloween fiscal statement being pushed back.
The fiscal black hole is expected to now be about half the original estimate of £70bn, given Hunt has reversed many of Truss’s planned tax cuts. Sunak has warned of “difficult decisions” but stressed he will be “compassionate” when decisions are taken on spending cuts.
