By William Schomberg and Andy Bruce
LONDON -Finance minister Jeremy Hunt pushed back against talk of a decline in Britain on Friday, promising that Brexit would catalyse a new age of growth for an economy that has increasingly lagged behind its peers.
Hunt, who steadied financial markets after the turmoil of former prime minister Liz Truss’ “mini-budget” in September, signalled that in an upcoming budget he would stick with planned tax hikes that have angered members of his governing Conservative Party.
He repeated his ambition to create a “new Silicon Valley” with a shift to new, high-value industries such as renewable power and advanced manufacturing.
“Our plan for growth is necessitated, energised and made possible by Brexit,” Hunt said in a speech at Bloomberg’s headquarters in London.
With six weeks to go until his March 15 budget and his party trailing far behind the opposition Labour Party before an election expected next year, Hunt said he wanted lower taxes but sound money had to come first.
It was time for a “fundamental programme of reform” for the labour market, Hunt said, as workers who dropped out of the workforce during the COVID-19 pandemic needed to return to work as another way to improve growth.
Tony Danker, head of the Confederation of British Industry, this week said Britain had been “spectacularly overlapped and overtaken” on green investment but Danker on Friday welcomed Hunt’s emphasis on growth.
“We hope the budget in less than two months will show strong actions to move us forward,” he said.
Hunt, asked about major U.S. subsidies to encourage green investments in the United States and similar measures in the European Union, said he was concerned about moves that might hinder free trade but not about Britain’s clean energy future.
Rachel Reeves, the Labour Party’s finance spokeswoman, said there had been 13 years of economic failure from the Conservative Party. “The Tories have no plan for now, and no plan for the future,” she said in a statement.
Hunt said declinist talk did not reflect the fact that Britain’s economy had grown by more than those of France and Germany since 2010.
More recent comparisons are less favourable: official data show Britain is the only Group of Seven economy that failed to recover its pre-pandemic size by the third quarter of 2022.
Most economists say Brexit has – so far – contributed to Britain’s recent weak business investment, trade and economic growth performance.
Hunt confirmed that reforms to the European Union’s Solvency II rules would be implemented in the coming months, allowing insurers to invest more in the economy.
He said that Britain needed to lower taxes but that this could not happen right away.
“With volatile markets and high inflation, sound money must come first, but our ambition should be to have nothing less than the most competitive tax regime of any major country,” Hunt said.
Tackling high inflation was a top priority, he said.
“The best tax cut right now is a cut in inflation,” Hunt said.