Chancellor Jeremy Hunt delivered a stark warning about the state of the UK economy at the International Monetary Fund's annual meeting in Marrakech. He stated that a recent deterioration in

public finances would necessitate "difficult decisions" in the upcoming Autumn Statement. Hunt explained that borrowing is projected to be £20 to £30 billion higher than initially forecast in the March Budget, which reduces the possibility of any tax cuts.

The Chancellor addressed the impact of rising interest rates on the fiscal situation, noting, "The main reason things are more challenging is because interest rate projections for all economies have gone up. The UK is not immune to those changes. We are likely to see an increase in debt interest payments of £20bn-30bn, and that’s a huge challenge."

Andrew Bailey, Governor of the Bank of England, also emphasized that interest rates are expected to remain high, indicating that there is "an awful lot left to do" to bring inflation back down to its 2% target rate. He pointed out that the policy is acting restrictively, affecting the economic outlook, which remains rather subdued.

Hunt concluded that he must ensure the UK is resilient to future shocks and reiterated that increasing borrowing would be reckless and ill-advised. His remarks come in the wake of the Office for National Statistics' report that GDP rose only 0.2% in August, raising concerns about a potential autumn recession as the economy may have contracted over the third quarter as a whole. Photo by Ted Eytan, Wikimedia commons.