Claims UK heading for austerity 'simply unfounded', says Rishi Sunak

UK Prime Minister Rishi Sunak refuted claims that his economic strategies would usher in a new era of austerity in the UK, despite warnings from the official fiscal watchdog that his tax-cutting approach implies a significant tightening of resources for stretched public services.

In an interview to Bloomberg on Sunday, Sunak said, “Any commentary or accusation that’s what’s happening is just simply unfounded.”

“Government is already spending a lot of people’s money. I’d rather focus on efficiency in the public sector and prioritise cutting people’s taxes rather than the government spending ever more of their money.”

Sunak made these remarks before the UK’s Global Investment Summit in London, where prominent figures like Blackstone’s Stephen Schwarzman and JP Morgan Chase Chief Executive Officer Jamie Dimon were expected to attend. The government announced £29.5 billion ($37.2 billion) of new investment for the summit, although at least £10 billion of this investment had already been disclosed.

The term “austerity” carries political sensitivity for Sunak, who is attempting to narrow a poll gap of about 20 points with the opposition Labour Party ahead of an anticipated general election next year.

The impact of Britain’s previous austerity period, during the premiership of David Cameron (now Sunak’s foreign secretary), continues to reverberate across various sectors, including social care, the justice system, and local governments.

Despite Chancellor of the Exchequer Jeremy Hunt’s announcement of £21 billion in tax cuts last week, Sunak’s government has faced criticism, with concerns that another round of cuts is inevitable.

According to the Office of Budget Responsibility, the tax cuts were largely funded by a £19 billion reduction in the real value of government spending after the next general election, compared to the government’s previous plans.

With inputs from agencies