British finance minister Rishi Sunak, preparing for a budget update this week, said on Sunday he would help where he could with a cost-of-living squeeze but warned that the Ukraine crisis and sanctions on Russia would add to the economy’s problems.
Britain and its allies have imposed sanctions on Russia and energy prices have jumped following the invasion of Ukraine, intensifying a surge in inflation.
Asked by BBC television if he planned to step in and help households with their energy bills, Sunak said: “Of course I am and people can judge me by my actions over the past two years where we’ve been able to make a difference.”
But he said the government could not solve every problem.
“I wish I could but I can’t, especially when you’re dealing with global inflationary forces that are at play,” Sunak said.
He is due to deliver a Spring Statement on the public finances and his tax-and-spending plans on Wednesday, with inflation heading for 8% soon and the economy set to slow after its post-pandemic rebound.
Sunak said he understood the impact on people from rising prices but added that to cut value-added tax on fuel would be the opposite of targeting support for those facing the biggest squeeze.
He declined to comment on whether he was planning to cut a separate duty on fuel, a move called for by the opposition Labour Party.
Sunak announced measures in February to soften the hit to households from their energy bills but prices have continued to rise since then, prompting other governments to respond. France and Sweden will subsidise automotive fuel costs, while Germany and Italy are considering similar plans.
Sunak repeated his plans to reduce taxation in the future – the government’s tax take is due to rise to its highest in 70 years in order to pay for Sunak’s COVID-19 spending surge – but he said a planned rise in national insurance due to begin in April to fund health and social care spending was fair.
Asked whether there was a risk of recession due to the Ukraine crisis, Sunak said he would not speculate.
“What I would say to people is they should feel confident about the strength of our economy,” he told Sky News. “But the outlook is uncertain … because of what’s happening in Ukraine.”
(Reporting by William Schomberg and Alistair Smout; Editing by Pravin Char)