Rishi Sunak has promised he can hold down hikes in mortgage bills, as he argued spending cuts and tax increases are a price worth paying to curb inflation.
In his first interview since reaching No 10, the prime minister refused to rule out a return to austerity as the Treasury hunts for a £50bn package of savings to bring borrowing under control.
Instead, Mr Sunak insisted inflation – tipped to reach 11 per cent by the end of the year – is the “number one enemy”, ahead of the crucial autumn statement on 17 November.
“It’s right we’re honest about the trade-offs we face. Everyone now talks about borrowing, everyone appreciates that the government cannot do everything,” he told The Times.
Whitehall departments are braced to make billions in further spending cuts, despite warnings they were stripped to the bone in George Osborne’s first austerity programme.
The Bank of England has also forecast a £3,000 annual hike on mortgage bills, after it increased interest rates by 0.75 per cent to 3 per cent on Thursday.
The consumer champion Martin Lewis predicted a “horrendous shock” for people forced to remortgage in the months to come, when coming off the very low rates of the last decade.
Mr Sunak said: “I absolutely recognise the anxiety that people have about mortgages. It’s one of the biggest bills people have.
“So what I want to say to people is, that I’m going to do absolutely everything I can to grip this problem, to limit the rise in those mortgage rates.
“I think inflation is the number one enemy, as Margaret Thatcher rightly said. Inflation has the biggest impact on those with the lowest incomes. I want to get a grip of inflation.”
Mr Sunak also defended Suella Braverman for saying the south coast of the UK faces an “invasion” of asylum seekers – while declining to use the incendiary word himself.
“What Suella was doing was conveying a sense of scale of the challenge we face, which is serious and unprecedented,” he said, adding: “There is no easy overnight fix to that challenge.”
Mr Sunak pointed to his record as chancellor – when he introduced the Covid furlough scheme – as a reason for people should trust him over the economy.
“I completely acknowledge that trust has been damaged over the past few weeks and months. I realise that trust is not given, trust is earned. My job is to regain people’s trust,” he said.
“The only thing that people will take away from the summer – hopefully from my track record as chancellor – I’m someone they can trust understands the economy.
“I’m someone they can have confidence in, who will manage us through what will be a difficult economic time. I’ve got a track record in doing it.”