The choices Jeremy Hunt faces over the Budget

The chancellor seems set on cutting taxes next year – in a pre-election giveaway – rather than now, argues Sean O’Grady

The main outlines of fiscal policy were set out when Hunt reversed almost everything in the Kwarteng Budget last year (Stefan Rousseau/PA)

The respected Institute for Fiscal Studies (IFS) has produced its latest outlook for the public finances, ahead of the Budget on 15 March. There are good and bad omens for the chancellor, Jeremy Hunt – and plenty of tough choices.

Aren’t the public finances doing unexpectedly well?

Yes. At the moment, public sector borrowing is about £30bn below where the Office for Budget Responsibility (OBR) said it would be when they last made a forecast, back in November. At that point, in the immediate aftermath of the disastrous Liz Truss-Kwasi Kwarteng plans for the economy, things were looking especially grim, with higher interest rates seemingly nailed on, and a protracted recession. Since then, interest rates have moderated in response to the change in stance of Sunak and Hunt, inflation is set to fall faster than anticipated, with energy costs moderating, and the cost of subsidising household bills looks to be subsiding more readily as well. The Bank of England has also confirmed its view that the recession will be shallower and shorter than previously thought.