U.K. Treasury officials informed the British Prime Minister, Rishi Sunak, that tax cuts would minimally boost growth, Bloomberg reported on Tuesday. This perspective seems to contradict Chancellor of the Exchequer Jeremy Hunt's promise of a "boom" reminiscent of the 1980s, fuelled by planned giveaways in the annual budget in March. Treasury documents presented to Sunak's senior team in late 2022, as seen by Bloomberg, suggested that both increasing high-skilled immigration and altering planning rules to construct more homes could significantly boost the economy at a low fiscal cost. In contrast, personal tax cuts would have a minimal impact, despite their medium fiscal cost. The Treasury, often criticised by right-wing Conservatives for its preference for higher taxes and immigration, came under fire from former Premier Liz Truss as her pledge for substantial tax cuts unsettled markets and resulted in her rapid loss of power. This suggests that Sunak followed some Treasury advice, especially on handling increased immigration, while party politics shaped his tax cut support and reluctance to change planning rules. The analysts predicted that measures introduced in the autumn, such as a 2% payroll tax cut and business investment incentives, would result in a permanent 0.5% output increase by 2028.
