Osborne-era austerity could return as another Chancellor tries to fix country’s finances
An era of rising tax thresholds ushered in by George Osborne will be further consigned to the history books this week as Jeremy Hunt confirms a stealth raid to plug the hole in government finances.
A four-year freeze to the income tax threshold has already been announced and the Chancellor is thought to be looking at extending that for another two years to 2028.
Hunt and allies believe the raid is necessary to plug the multi-billion pound hole in government finances, but those on the pro-growth wing of the Conservative Party fear it could doom Britain to a self-perpetuating cycle of higher taxes.
“That is the risk that you take by raising taxes at this point in the cycle – that you never get out of it,” says Jacob Rees-Mogg, the former Business Secretary. “The economy shrinks, you raise taxes more to try to fill the hole, the economy shrinks more, and you are constantly raising taxes to deal with the shrinking economy.”