UK Prime Minister Rishi Sunak is seeking to build a buffer in public finances as he draws up an economic plan to plug Britain’s budget shortfall, which could entail tax rises and spending cuts totaling as much as £50 billion ($58 billion).
Sunak and Chancellor of the Exchequer Jeremy Hunt want the extra headroom over and above the UK’s £35 billion fiscal hole so that the package has credibility with the markets, an official familiar with the matter said. Another said that could entail spending cuts and tax rises closer to £50 billion, a figure widely reported in the British media on Friday. Both spoke on condition of anonymity because the plans are unpublished.
Britain’s new premier is trying to restore calm to the financial markets after his predecessor, Liz Truss, sparked turmoil during her 7-week tenure with a massive package of unfunded tax cuts that tanked the pound to an all-time low against the dollar and sank the gilts market. Sunak and Hunt on Wednesday delayed a planned economic statement to Nov 17 from Oct 31.
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