Jeremy Hunt is preparing to deliver a brutal budget with a grim package of £54billion tax rises

Britain must ‘face the storm’ of global recession, Jeremy Hunt will warn tomorrow morning as he prepares to issue one of the most brutal budgets in modern history.

The chancellor will call for ‘sacrifice’ to fall inflationwhich jumped to the highest value in the last 41 years, namely 11.1 percent.

Mr Hunt will unveil a bleak £54bn package of tax rises and spending cuts aimed at convincing financial markets that ministers are serious about tackling Britain’s high debt burden.

The Chancellor, who raised taxes by £32bn last month, will announce a further £24bn of tax rises, taking the total tax burden to a new post-war record.

While the tax measure will be skewed towards higher earners, finance ministry sources say ‘all’ taxpayers will face higher bills.

The tax bomb – equivalent to £854 per household – will be accompanied by £30bn of real spending cuts, with rises of just 1 per cent expected in the three years after the next election.

A range of immediate projects look set to be scrapped or delayed, including a government-led cap on social care spending.

Mr Hunt will tell MPs that ministers must now take “tough decisions” to tame inflation, which he describes as the “enemy of stability”.

“It is undermining savings, causing industrial unrest and reducing funding for public services,” he will say. ‘This hurts the poorest the most and erodes the trust on which a strong society is built.’

He will note that the UK is facing “a global energy crisis, a global inflationary crisis and a global economic crisis”.

“But the British are resilient, resourceful and resourceful,” he will say. “Before, we were up to bigger challenges.

“We are not immune to these global winds, but we will weather the storm with this plan for stability, growth and public services.”

The chancellor will say that just as families “make sacrifices every day to live within their means, governments must too because the UK will always pay its share”.

However, Mr Hunt will insist the package is “fair” and “compassionate” and pledged to “protect the vulnerable”.

Pensions and allowances will rise in line with September inflation of 10.1 per cent, taking the new state pension up by £18.70 to £203.85 a week.

Despite the squeeze, the NHS will get billions to survive this winter under plans to protect ‘core services’ such as health, education and the police.

And Mr Hunt will pledge to continue supporting energy bills for all households next year, albeit at a much less generous rate.

The Chancellor’s warning was:

• The Office for Budget Responsibility is set to warn that the UK is heading into recession.
• Official data showed food prices rose by 16.2 percent – the fastest growth since the 1970s – with prices of staples such as milk, eggs and pasta rising.
• Former ministers Esther McVey and Simon Clarke have said they may not vote for the budget if the tax hike goes too far.
• Bank of England Governor Andrew Bailey has warned that interest rates are continuing to fall despite falling living costs.
• Mr Hunt was preparing to unveil plans for a major scheme to help people isolate their homes.
• Defense Secretary Ben Wallace urged the chancellor not to cut military spending, saying “the stability of national security” was essential to the economy.
• Rishi Sunak promised to release his tax return but said he would not reveal details of his heiress wife’s finances.

The Prime Minister was returning from the G20 summit in Bali ahead of today’s budget statement, due to start at 11.30am.

He told a press conference at the summit that “insidious” inflation in the UK had to be “caught down” and was now his “absolute number one priority”.

“It makes people poorer, that’s what inflation does,” he said. ‘And it is the enemy that we must face. I want to make sure we do that, and as soon as possible.

“I want to limit the rise in mortgage rates because it is also causing anxiety for millions of homeowners.

“And as we face these global economic shocks, we’re going to have to make some tough decisions at home to protect ourselves from them and start to get inflation under control.”

Hunt’s massive “fiscal tightening” package is designed to ensure he can show Britain’s debt will begin to fall as a share of GDP within five years.

To achieve this, he will raise taxes to post-war record highs, hitting workers of all incomes.

Income tax thresholds will be frozen for six years, pushing millions of workers into higher tax brackets.

Thresholds for National Insurance, Inheritance Tax and tax-free pension savings will also be frozen.

High earners will see the starting point for paying the 45p rate fall from £150,000 to £125,000, pulling a further 250,000 people onto the top rate.

Savers, investors and second home owners will also be affected, with increases in capital gains tax and dividend tax.

Mr Hunt will also unveil plans for a significant increase in windfall tax on energy companies to help pay for a reduced support package for energy bills.

The scale of the package is causing concern among some Tory MPs and ministers, who fear the chancellor risks stifling any hopes of growth and deepening the recession.

Mr Clarke, who was Mr Sunak’s deputy before joining Liz Truss’s cabinet, urged Mr Hunt not to “throw the baby out with the bathwater”.

He admitted that “mistakes were made” in handling the mini-budget.

But he said the goal of cutting taxes to spur growth was “important and valid.”

Asked if he would vote for the budget measures, he said on BBC Radio 4’s PM programme: “We have to see what the package is, but I always try to support the government and I really hope I can.

“I hope they strike a balance that is much more about cutting spending than raising taxes to balance the books.”

A Treasury source said Mr Hunt would maintain core measures to boost growth, but added: “You can’t have economic growth with 11% inflation.”