THE Chancellor has confirmed the public sector will be forced into major spending cuts as part of his plans to stabilise the economy.
Jeremy Hunt said “all departments will need to redouble their efforts to find savings and some areas of spending will need to be cut”.
He also announced the current energy price guarantee will only last until April with a Treasury-led review to be launched on how the government provides support beyond this.
Hunt said in an emergency statement: “There will be more difficult decisions on tax and spending as we deliver our commitment to get debt falling as a share of the economy over the medium term.
“All departments will need to redouble their efforts to find savings and some areas of spending will need to be cut.
“But as I promised at the weekend our priority in making the difficult decisions that lie ahead will always be the most vulnerable.”
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The announcement could have serious implications for the Scottish economy which, according to the Institute for Fiscal Studies (IFS), is already facing a £3.5 billion gap by 2026/27 – the equivalent of £640 per person.
Finance Minister Kate Forbes has previously said rising inflation was having an impact on the Government’s finances and it may have to consider dropping some policy commitments if Westminster refuses to make up the shortfall.
SNP shadow chancellor Alison Thewliss has already said more austerity would threaten Scotland’s NHS and public services and consign millions to poverty.
Elsewhere in his emergency statement, Hunt - who will still reveal a medium-term fiscal plan on October 31 - scrapped plans to cut the basic rate of income tax from 20p in the pound to 19p from April next year. This will not affect Scotland.
He said it is not right to borrow to fund this tax cut as he U-turned on almost every tax policy put forward by Liz Truss.
Hunt added: “The most important objective for our country is stability.
"I remain extremely confident about the UK's long-term economic prospects as we deliver our mission to go for growth."
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