SINCE becoming Chancellor, I’ve been honest with people about the difficult decisions that lie ahead.
There is no escaping the fact that we are in the grips of a full-blown global cost-of-living crisis.
The British people deserve to know why this is happening, and what their government plans to do about it.
Firstly, the root cause is inflation.
This is the hidden tax slowly eating into pay cheques, savings, and the weekly food shop.
Our primary mission is to get prices under control, so everyone’s money goes further.
But to understand how we get there, it’s important to know how we got here.
Undeniably, Vladimir Putin’s invasion of Ukraine and the painful aftershocks of Covid are disrupting economies across the world.
The UK, along with the US, Germany, Italy, and many other European countries, is grappling with rising prices.
And with a third of the global economy forecast to be in recession this year or next, I am sorry to say that we are not immune.
The reverberations are so great the UK economy is forecast to be three per cent smaller next year compared to the International Monetary Fund’s expectation in January — before Putin invaded Ukraine.
And the central driver pushing up inflation is energy.
Putin is weaponising Russia’s gas supply, sending prices to all-time highs both here in the UK and abroad.
Europe hasn’t experienced anything like this since the 1973 oil crisis.
While we import very little gas from Russia, as a major global exporter they effectively set the price we pay at home.
You can already see the impacts.
Inflation is at a record high of 10.7 per cent across the Euro area, and even higher in Germany at 11.6 per cent.
In the UK, inflation has hit 10.1 per cent — which is plain to see on our supermarket shelves.
Feeling the pinch
The entire country is now having to think more carefully about our food budgets, filling up our cars and heating our homes.
And as inflation rises, the Bank of England raises interest rates too — a necessary measure that has my full support, but one that does mean the cost of mortgages climb further.
Businesses are also feeling the pinch.
With the costs of energy, goods and materials getting more expensive, they have no choice but to pass this through to the products and services they sell.
And if consumers spend less, it gets tougher for companies to hire, pay their bills and invest.
I wish I could paint a better picture, or tell Sun on Sunday readers that everything will be fine. But I can’t do that.
I want to be honest with people. Britain is not immune from these global challenges.
No doubt many people reading this will be looking ahead to Christmas — a time that should be filled with joy, hope, and expectation — and instead feeling worried and anxious, unsure of how and when things will improve.
That is why we must wage a war on inflation — the number one enemy that is making everyone poorer.
But to win this war, I need to take difficult decisions on public spending and taxes now.
We need to get debt falling and show the world that Britain will always pay its way.
It would be easy for the government to sit back and do nothing, hoping this will all magically end.
We could pretend there’s a pot of cash hidden away in the basement of the Treasury and spend our way out of the economic turmoil.
Or worse, we could borrow the money and heap debt on to our children and grandchildren to pay off in the future.
But the history books show that trying to spend your way out of a recession caused by high inflation only adds fuel to an already raging fire.
Cutting taxes now will send prices spiralling even higher, completely wiping out any benefit.
Yes, your monthly pay slip would look higher, but prices on the shelves would rise even more so.
This would be an irresponsible response to a situation that requires responsible financial management.
The most important thing we can do right now is to restore stability, sort out our public finances, and get debt falling.
That is the only way to grip inflation and keep those interest rate rises as low as possible.
I’ll always be honest
But my pledge to the British people is this: I will be honest about the challenges we face and fair in the measures I announce to address them.
I therefore promise that the most vulnerable people in our society will be protected during this period of global economic upheaval.
While we cannot protect everyone, we will ask those with the broadest shoulders to carry a little more of the load.
The wealthiest in society, large corporations and big energy companies will be asked to contribute more.
That is the right and fair thing to do.
But we are not alone. Countries across the world are preparing to take tough decisions. France, Germany and Italy all have tough commitments to get debt falling.
We are all exposed and all responding to the same challenge.
I will always be honest with the British people about the challenges ahead, but I am also a great believer in this country.
There is a way for us to get through this difficult time and secure long-term economic growth, but we cannot do that with rampant inflation.
We need to get prices under control and help people’s pay packets go further.
If we get this right, we can lay the foundations of a prosperous economy that benefits all.
