Jeremy Hunt’s Budget must appease Tory voters and keep Britain’s economy stable

Jeremy Hunt and Rishi Sunak are meeting tonight to run through what is likely to be the most consequential Budget for their political futures.

But despite reports of a high stakes summit, a crunch tête-à-tête was not on the cards. “It’s not as theatrical as that,” a Treasury source said. “It’s sort of an ongoing sign-off process. That’s not how decisions are made in government.”

While the reality may not be as dramatic as journalists might like, the importance of Wednesday’s fiscal statement cannot be overstated for the Tories , for Labour and the country at large.

Mr Hunt faces the difficult balancing act of trying to conjure a package of measures that will appease both Tory backbenchers and keep the country’s economy on an even keel. The Chancellor is under pressure to hand Tory MPs a raft of giveaways in the shape of tax cuts that they can go and sell to voters on the doorstep come the next general election.

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But he must also stick to his own fiscal rules, while avoiding fuelling inflation, which still stands at more than double its 2 per cent target. To try to please both, he could decide to lower the Government’s public spending plans in the future. By raising spending on public service by 0.75 per cent from 2025 onwards, instead of the current plan of 1 per cent every year, would hand him about £5bn extra to play with.

Mr Hunt was explicit during his broadcast round yesterday morning that he did not believe that improving public services was “all about spending money”. But any such move to further tighten public service spending is fraught with problems. Should he decide on such a path, he would leave himself and the Conservative Party open to accusations that he is ushering in austerity by the back door.

It would also represent a serious political gamble from the Tories, if they were willing to bet that voters were ready for another round of major belt-tightening in the public sector in favour of lower taxes.