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Jeremy Hunt has sought to give Tory MPs an early Christmas present with another hint he could cut taxes ahead of a general election next year.
The chancellor suggested he could have more money to play with as the government pays less interest on its debt.
Mr Hunt said ministers would “cut the tax burden if we are able to” in an interview with Bloomberg Television.
However, he cautioned he would not do anything that risked fuelling inflation again. Mr Hunt is under intense pressure from MPs in his own party to cut taxes as they scramble to try to save their jobs.
With Labour around 20 points ahead in the polls, some Conservatives feel the move is one of the few ways they can avoid wipeout at the election.
Mr Hunt said: “If debt interest payments go down then potentially that gives me more headroom and I could use that in lots of different ways but I would never use it in a way that would compromise the battle against inflation.”
“We would like to bring down the tax burden in a way that is responsible.”
Mr Hunt announced what he said was the largest series of tax cutting measures since the 1980s in the autumn statement.
But he came under fire when it emerged the overall tax burden was still on course to hit a post-war high.
His latest comments on tax come a day after the government received an end of year boost as official figures showed the rate of inflation has fallen further than expected.
But there was also bad news, as statistics revealed government borrowing was higher than forecast in November.
Mr Hunt gave the interview as he struck a post-Brexit banking deal with Switzerland aimed at easing UK finance firms’ access to the country’s market and vice versa.
It come as the British Chambers of Commerce (BCC) urged Mr Sunak and Mr Hunt to consider a range of side and supplementary deals with the EU to ease ongoing trade friction.
Almost two-thirds of UK exporters say selling to the EU has become even harder in the past year, according to the BCC’s latest Brexit report.
The leading business group called for a series of agreements with Brussels – on carbon taxes, VAT arrangements and food checks – to soften the impact of Boris Johnson’s trade deal.
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