(Bloomberg) -- Chancellor of the Exchequer Rishi Sunak said he'll set his annual budget on Oct. 27 alongside a three-year spending review, pledging to put the U.K. public finances on a “sustainable path.”
In a letter to ministers, Sunak said that he and Prime Minister Boris Johnson have agreed on plans that will increase core departmental spending by an average 4% in real terms every year through the current five-year parliament.
“We have also been clear on the need to put the public finances on a sustainable path in the medium term so that we are resilient to future challenges,” Sunak wrote. “We will need to make trade-offs to ensure that this increased spending is focused on the delivery of our key commitments.”
Sunak is trying to repair a budget deficit that ballooned to a peacetime high of over 14% of gross domestic product in the last fiscal year, while at the same time delivering on a series of expensive manifesto commitments.
Tuesday's announcement came while Johnson was in Parliament announcing new taxes totaling 12 billion pounds ($17 billion) per year in order to help the National Health Service deal with a backlog of operations that built up during the Covid-19 pandemic, and to overhaul the country's social care system. The new levies, Johnson acknowledged, break an electoral promise.
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