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New UK finance minister Zahawi pledges to grow economy

british new chancellor of the exchequer nadhim zahawi arrives for tv interviews, in london
British new Chancellor of the Exchequer Nadhim Zahawi arrives for TV interviews, in London, Britain, July 6, 2022. REUTERS/Phil Noble

Britain’s new finance minister Nadhim Zahawi pledged on Wednesday to rebuild and grow the struggling economy and said he would look at all options to do that, including the possibility of tax cuts.

Zahawi, who moved from the education ministry to the Treasury on Tuesday after the resignation of Rishi Sunak, said: “nothing is off the table”.

But he also faced questions in his first media interviews on the job about whether he would even have a chance to steer the economy out of its looming slowdown, given Prime Minister Boris Johnson’s weakened grip on power.

As well as Sunak, Sajid Javid quit as health minister in protest against Johnson.

Britain’s economy is showing clear signs of a slowdown as inflation heads for double-digits and it is forecast to be weaker than other big industrialised economies next year.

As well as the challenge of soaring energy and food costs, Britain is also struggling to adjust to life after Brexit.

Zahawi, widely credited in the Conservative Party for successfully overseeing Britain’s COVID-19 vaccine rollout, said 2023 was shaping up to be “really hard” and he would focus on the cost-of-living squeeze facing households.

He hinted at a rethink of Sunak’s plan to increase taxes on businesses next year.

“Nothing is off the table,” he told BBC radio. “I will come back on your programme and happily talk about where I think can do more on taxes. We are determined to do that, as was my predecessor. He was determined to do that on personal taxation and of course on other taxation as well.”

But Zahawi said his priority was to fight inflation – something that could be aggravated by tax cuts now – and he also stressed the need to fix the public finances after his predecessor spent more than 400 billion pounds ($479 billion) to cushion the economic blow dealt by the coronavirus pandemic.

“We have just come out of the equivalent of a world war. We have to rebuild the economy and return to growth,” he said, adding the government would have to be careful about increases in public sector pay which could drive inflation higher.

“The important thing is to get inflation under control, be fiscally responsible,” he told Sky News.

Zahawi was appointed after Sunak quit the job in protest at Johnson’s “standards” and citing differences over economic policy with the prime minister.

The main opposition Labour Party said the chaos at the top of British politics was adding to the economy’s problems.

“The pound fell again yesterday. The pound is weak because the government is weak. And a weak pound means the costs of energy, the cost of petrol and diesel go up and up and up,” Rachel Reeves, Labour’s would-be finance minister, said.

“So the weakness of this government is directly contributing to the increase in the price of petrol at the pump,” she told BBC radio.

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