Millions of public sector workers face a two-year pay squeeze as the Government abandons plans for a new spending review.
Millions of public sector workers face a two-year pay squeeze as the Government abandons plans for a new spending review.
Liz Truss dropped proposals for a new review that she made during the Tory leadership contest, as Kwasi Kwarteng, the Chancellor, vowed to cut more taxes in a gamble for growth
The last review, which set out the "envelope" for public spending over a three-year period, was done last year before the Russian invasion of Ukraine when inflation was expected to peak at 4%
With inflation now expected to rise to 11% in the autumn and remain high for much of next year, it leaves civil servants facing real-term pay cuts before the 2024 General Election
The Chancellor has meanwhile said there is "more to come" on tax cuts before a budget in the new year, despite sterling hitting a 37-year low in the wake of his "mini-budget" last week.
Mr. Kwarteng announced a £45 billion package of tax cuts last Friday, including scrapping the 45p income tax rate and cutting the basic rate by 1p in the pound
He is now said to be looking at increasing the annual allowances on pension pots and raising income tax thresholds
Overnight in Asia and Australia, the pound fell to an all-time low against the dollar after Mr Kwarteng hinted at more tax cuts
Mr. Kwarteng, however, said the pandemic and the war in Ukraine were "multigenerational events" and that the Government had to respond in an expansive way