TERROR attacks on ships in the Red Sea could sink hopes of big Budget tax cuts, government insiders say.
Chancellor Jeremy Hunt has warned he does not have the “same scope” for giveaways as he did in the Autumn Statement.
EPAJeremy Hunt’s big tax cuts in the Budget could be sunk by Houthi terror attacks on shipping in Red Sea[/caption]
He is expected to make “surgical” interventions by cutting taxes on work — such as National Insurance Contributions.
It comes as Iran-backed Houthi rebels continue to attack Western commercial shipping in the Red Sea.
The situation has sent the cost of container vessels transporting goods from Asia to Europe soaring, which could further fuel inflation.
These ships usually go through the Suez canal.
But many container vessels are now going the far longer — and more expensive — safer route round Africa’s Southern Cape.
A government insider said: “Jeremy is not just managing expectations with his comments.
“Just look at what is going on in the Suez Canal.
“There is a risk that is inflationary.”
Container shipping rates have soared since the Houthis launched their assaults in support of Hamas in Gaza.
In a single week in January, the cost of a 20ft container on the Shanghai to Europe route rose 8.1 per cent to £2,375.
The gloomy news comes as Mr Hunt faced calls to finally cut booze duty on spirits — as Britons pay more tax than any other G7 country.
Some 80 per cent of the cost of a bottle of spirits is tax.
Scotch and gin makers say the current rate of alcohol duty is “unsustainable” and leading to pub closures.
They have written to the Chancellor calling for a cut at the Spring Budget in March.
The UK Spirits Alliance wrote: “Britain’s hospitality sector is currently in crisis, as pubs and bars across the UK close daily due to rising costs.
“Given one third of all drinks served in hospitality are spirits, we know the duty burden is too much to bear.”