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Britain’s economy has a ‘sprained ankle, not a broken leg’, says Hunt

Jeremy Hunt
Jeremy Hunt touted the UK as a destination for AI investment and lauded the country's education system - Hollie Adams/Reuters

Jeremy Hunt has likened problems with Britain’s economy to a “sprained ankle” rather than a “broken leg”, saying that those who talked down the country have consistently been wrong.

The Chancellor admitted the UK had fallen into a “low growth paradigm” since the 2008 financial crisis alongside other major advanced economies, but insisted that reforms announced in the Autumn Statement would help to boost growth.

Speaking at a conference hosted by the Resolution Foundation, Mr Hunt said tax cuts announced in his Autumn Statement would help increase investment and dismissed the suggestion that Britain was “going to hell in a handcart”.

Responding to an audience member who claimed the Resolution Foundation had diagnosed Britain’s economy as having a “broken leg”, Mr Hunt said: “I think it’s really important not to lose our self-belief.

“If we’re going to go into dealing with the sprained ankle rather than the broken leg, let’s do so from a perspective of positivity because we’ve got so much going for us.”

It came as S&P Global warned that the UK will perform worse than any other major economy next year as inflation remains higher than Europe or the US.

S&P downgraded its expectations for growth in 2024 to 0.4pc, down by 0.1 percentage points on its previous forecast. Even Germany is expected to outpace the UK next year as its manufacturing recession eases.

Mr Hunt said many predictions by forecasters and commentators had been too gloomy in the past, including the Government’s own independent forecaster.

The Chancellor said: “What we shouldn’t lose is the fact that despite lots of venerable magazines saying that we’re going to hell in a handcart, we always confound expectations in this country, and we do far better than everyone says.

“A year ago, all these experts were saying that the economy was going to contract. The Office for Budget Responsibility (OBR) said it was going to contract by 1.4pc. It’s actually [predicted to] grow by 0.6pc. That’s a 2pc difference in just one year.”

Mr Hunt said entrepreneurs including Elon Musk had praised Britain’s status as a hub for investment in artificial intelligence, while Britain’s education system was also the envy of the world.

The Chancellor signalled his ambition to boost public investment if the economy improved further. He said: “I don’t think you want declining public investment, and I hope we get to a place where we don’t have that.”

It comes after Labour leader Sir Keir Starmer indicated he will not “turn on the spending taps” if he wins the next election.

Addressing the same conference as Mr Hunt, Dame Sharon White, the boss of John Lewis, urged policymakers to treat Britain’s stagnating economy as a “national emergency” as she called for cross-party agreement on policies to revive the economy.

Andy Haldane, a former Bank of England chief economist, warned that the Treasury was not fit for purpose in its current form and urged policymakers to break up the department. He said a new economy ministry, based in Darlington, should be created and tasked with driving growth.

He said the Treasury’s focus on balancing taxes and spending had “blighted UK growth policy over many decades”, with “the fiscal first inclinations of the Treasury” always taking priority over any pro-growth agenda.

Speaking on a separate panel, Mr Hunt spoke out against the idea. He said: “The problem with that is that in any political system ultimately, power resides where the money is. And you don’t want the department that’s responsible for growth to have to negotiate for its budgets every year with the Treasury.”

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