People protest against the cost of living crisis in London
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Among the options believed to have been looked at are cutting fuel duty by as much as 5p and increasing universal credit. However, hours before Sunak unveils his Statement, the Office for National Statistics is likely to say that the squeeze on living standards tightened further in February, with consumer price index inflation rising from 5.5 per cent to 5.9 per cent. Last month Sunak announced a £9.8billion rebate to help 28 million households cope with the huge spike in energy bills, after Ofgem said its price cap will increase by 54 per cent in April to £1,971 per year due to higher wholesale market prices.
On Wednesday Sunak is expected to go further, given the ongoing squeeze on living standards from rising energy bills and higher commodities, food and clothing prices. As public finances are in better shape than forecast, he is understood to have room for spending on measures to help ease the cost-of-living crisis.
Chris Sanger, head of tax at EY, said: “Normally a Chancellor might want to maintain a war chest for closer to an election. However, Covid-19 has changed the timeline for raising and spending money for the public. If Sunak has any cash, he’ll probably spend it on the cost-of-living crisis.”
KPMG UK head of tax policy Tim Sarson predicted that the measures unveiled by Sunak are likely to be specifically targeted at the most vulnerable.
“The Spring Statement wasn’t intended to be used to launch significant new tax-related measures, but an intensifying cost-of-living crisis, coupled with what many expect to be a fairly rosy fiscal forecast, may mean Sunak can’t resist a few tax announcements,” he said.
“The Chancellor has hinted at a focused approach so a more characteristic step might be to increase Universal Credit, putting money back into the pockets of those most impacted by the cost-of-living crisis.”
Katherine Bennett, chief executive of High Value Manufacturing Catapult, the Government-funded network of manufacturing research centres, urged Sunak to unveil measures to encourage further investment in manufacturing.
She said: “We believe that UK manufacturing could grow from 11 per cent of GDP to 20 per cent. We have ambitions to get UK manufacturing from the top 10 globally into the top five.”
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