Rishi Sunak has insisted he will reduce taxes when inflation calms down and claimed economists said one in five people would pay higher tax rates under his policies.
The prime minister said the country’s finances were being boosted by departure from the European Union, dismissing Nigel Farage’s declaration that “Brexit has failed”.
Mr Sunak faces pressure from Brexiteers to deregulate the economy, reduce taxes and repeal laws written in Brussels from the statute book.
But he majorly downgraded the promised legislative “bonfire” ahead of the Institute for Fiscal Studies’ (IFS) forecast that 7.8 million people will pay income tax at 40% or more by 2027-28.
Speaking to reporters traveling with him to the G7 summit in Japan, Sunak said: “Right now we are dealing with high inflation and high borrowing and it is responsible to tackle that first.
“Once we’ve got inflation down and borrowing under control I’d like to be able to reduce the tax burden.”
As millions suffer from a cost-of-living crisis, the prime minister expressed optimism about the economy after the Bank of England stopped short of predicting the UK would enter recession this year.
“IFS will make its estimate. What I would say is that recently we have seen massive upgrades in our growth forecasts from a range of different people, be it the Bank of England or others including earlier IFSs,” Mr Sunak said.
“You can see that in the surveys of CFOs (chief financial officers) and other things — economic optimism is up, consumer confidence is up, growth projections are being raised.”
He argued that the Office for National Statistics figures on disposable income “are performing a lot better than what people thought”.
“So I think there are a lot of signs that things are moving in the right direction,” he said.
This week prominent Leave campaigner Mr Farage said the country “has not really benefited from Brexit economically”.
He blamed the Conservatives for mismanaging the economy, and said: “Brexit has failed.”
But Mr Sunak insisted he was “actually delivering the benefits of Brexit as opposed to talking about it”.
The prime minister said he has made free ports operational, cut VAT on sanitary products, reformed alcohol duty and scrapped hundreds of EU laws.
“These are not small things and they come on top of everything. I am quite sure that from an economic point of view we are delivering Brexit, the track record on that is very clear,” he said.
After a lengthy response, Mr Sunak said he was “happy to get that off my chest”.