Jeremy Hunt has accused Rachel Reeves of dragging Britain into “stagnation and decline” by raising taxes, warning that the Chancellor’s policies risk smothering the entrepreneurial drive the country needs.
Writing for Conservative Home, the former Chancellor said it was now “all but nailed on” that Reeves will raise taxes by £30bn in November’s Budget — pushing the overall increase in Britain’s tax burden to £70bn in just 13 months. He argued that while ministers focus on who the losers will be — pensioners, homeowners, savers — the greater danger lies in the long-term drag on economic growth.
Hunt pointed to OECD data showing that between 2010 and 2019, countries with lower public spending such as the US, South Korea and Australia grew on average 2% faster than high-spending nations such as Finland and Denmark. He argued that high taxation discourages investment, crowds out private capital and ultimately stifles “animal spirits” — the entrepreneurial energy John Maynard Keynes once said was essential for capitalism.
“Simply put, people work harder in countries with lower taxes,” Hunt said, citing data showing workers in lower-tax OECD economies put in 260 more hours a year than those in high-tax countries. He warned that Britain’s welfare system undermines incentives to work, with some claimants projected to earn more from benefits than full-time employees on the national living wage.
The Tory MP drew comparisons with the US, where Mississippi has pursued a decade of phased tax cuts. He claimed the policy had transformed the state into the fastest-growing in America, lifting wages and investment while reducing poverty. “The poorest state in America now has a higher output per head than we do,” he wrote.
Hunt, who raised taxes himself as Chancellor to steady markets after the Liz Truss crisis, said those hikes were only meant as a temporary necessity. He contrasted his approach — cutting national insurance and introducing “full expensing” for business investment — with Reeves’s decision to permanently increase borrowing and taxation.
“Countries with lower taxes tend to grow faster,” Hunt concluded. “I know which I’d prefer for the UK.”
Hunt vs Reeves: A Clash on Tax and Growth
Jeremy Hunt |
Rachel Reeves |
|
| Low taxes drive growth – argues OECD data shows lower-tax economies like the US and South Korea consistently outpace high-spending nations. | Higher taxes are necessary – says borrowing and tax rises are required to balance the books and fund public services. | |
| Introduced “full expensing” for business investment and cut employee NI by 4% while Chancellor, to boost hiring and entrepreneurship. | Increased borrowing by £28bn and raised employment costs in her 2024 Budget, a move businesses say risks job losses. | |
| Believes high taxes kill “animal spirits” – the entrepreneurial energy to take risks and work harder. | Argues that public spending and tighter fiscal rules are vital for stability, even if it means higher taxes. | |
| Points to Mississippi’s tax cuts as proof – the state slashed taxes, saw record investment, rising wages, and overtook the UK in GDP per head. | Says Britain must stick to strict fiscal rules, even if it means tax hikes of up to £30bn in the November Budget. |
Read more:
Jeremy Hunt warns Reeves: soaring taxes will kill UK’s ‘animal spirits’