The squeeze: how long will the pain last?

Rishi Sunak has ushered in a new era of austerity, not just Osborne-style spending cuts, but tax hikes as well. His Chancellor, Jeremy Hunt, says the plan is not just to balance the books but to control inflation, and so this will be the theme of the Sunak years: Austerity 2.0.

Throughout the leadership campaign, Sunak repeatedly argued that persistent high deficits were no longer an option. Difficult decisions lay ahead, he said, and claims to the contrary were ‘fairy tales’. His critics said this was a safety-first ‘Treasury view’, and Britain had plenty of scope to borrow more. But Sunak was certain that the debt racked up during the pandemic – not just by Britain but countries the world over – guaranteed a wake-up call at some point. The call came when Liz Truss and Kwasi Kwarteng tried to keep up the borrow-and-spend agenda. Now Sunak and Hunt are trying to respond.