Debt burden not to be aided by tax breaks, says Cameron

Recent increases in the cost of living including more expensive food, fuel and utility bills as well as VAT have made life trickier for some, but it is not possible to make “substantial” tax cuts to ease this, prime minister David Cameron has said.

In an interview with the Sunday Telegraph, Mr Cameron said that such a move would not be feasible at a time when the government is trying to bring the public sector deficit down as a share of gross domestic product (GDP).

He remarked: “I believe in tax cuts, but when you’re borrowing 11 per cent of your GDP, it’s not possible to make significant net tax cuts.”

“It’s no good saying we’re going to deal with the deficit by cutting spending, but then we’re going to make things worse again by cutting taxes,” the prime minister added.

However, he did state it would be desirable to see taxes come down in time and express the hope that this will be possible in due course to reward “hard working people”.

With no tax cuts to look forward to in the foreseeable future, consumers may consider the possibility of freeing up cash in other ways, such as taking out a consolidation loan.

This could mean bringing together all existing borrowing into one payment, which as well as being simpler could cost less overall in monthly repayments and the total amount to be paid back over time.

One reason inflation will have troubled many people with debts and others is because the increase in prices has outstripped rises in wages for almost two years, assistant editor of This is Money Simon Lambert noted last week.

By Joe White