Sunak on Wednesday delayed the announcement of a keenly awaited plan for repairing the country's public finances until November 17, two-and-a-half weeks later than previously planned.
The fortnight delay is expected to shrink the size of the black hole in the public finances by up to £10-15 billion ($NZ19.9-29.8 billion), The Telegraph reported, citing an analysis to be published by the Resolution Foundation think-tank.
The report noted a rapid fall in the interest rate paid on government gilts and a reduction in the international gas price.
It said Whitehall departments have been told to find savings of from 10% to 15% each.
Soon after Sunak became Britain's Prime Minister on Tuesday, he said difficult decisions lay ahead as he looks to cut public spending.
Jeremy Hunt, who was appointed as the Chancellor of the Exchequer (finance minister) by the former Prime Minister Liz Truss to calm markets roiled by her dash for growth, was re-appointed by Sunak and repeated his warning on Tuesday that "it is going to be tough".
Last week, The Telegraph reported that Hunt was considering up to £20 billion of tax rises in a budget that was previously scheduled for October 31.
Sunak takes on an economy facing recession at a time when the Bank of England is raising interest rates to tame double-digit inflation. Low growth and rising borrowing costs have worsened the strain on already-stretched public finances.
The government is drawing up spending cuts and cancelling tax cuts just as the rising cost of mortgages, food, fuel and heating is squeezing many household budgets to their limits.
Credibility hit
Britain's credibility in financial markets was shaken last month when Truss announced her unfunded tax cuts, triggering a bond market rout so severe the Band of England had to intervene. Truss was forced into a U-turn and eventually resigned.
While finance minister during the Covid-19 pandemic, Sunak oversaw huge expenditure and borrowing to keep the economy going. He resigned in July in protest at then-prime minister Boris Johnson's leadership and what he saw as a reluctance to take difficult decisions to pay the pandemic bill.
His appointment as Conservative Party leader was broadly welcomed by investors who see him and Hunt as more willing than Truss to tackle the hole in Britain's public finances.
Hunt said he wanted to restore confidence "that the United Kingdom is a country that pays its way and for that reason, the medium-term fiscal plan is extremely important. The plan would show falling over the medium term, he added.
The budget plan delay will complicate the Bank of England's job next week when it is due to publish forecasts for the economy without knowing the details of the government's fiscal plans, as well as take its latest monetary policy decision.
The bank is expected to raise interest rates again on November 3, probably to 3.0% from 2.25%, although investors increased their bets on a full percentage-point increase to a more than one-in-three chance after the announcement of the budget plan delay.
Leaner Christmas for Britons
Over two-thirds of British adults are planning to cut back on festive spending this year due to a worsening cost of living crisis, according to a survey published on Thursday.
Despite enduring two Christmases under social restrictions linked to Covid, three-quarters of adults are not planning a big celebration, the survey by Accenture showed.
About 49% of those surveyed were looking to cut back on gifts, 46% on eating out, and 35% on both general socialising and food and drink at home.
Of those planning to reduce spending this Christmas, 45% plan to buy food from budget-friendly supermarkets.
“The fact that shoppers are planning to spend less on gifts this year reflects just how low the mood feels in the run up to this Christmas," Accenture's retail strategy and consulting lead Kelly Askew said.
With inflation running at 10%, UK consumer confidence remains close to its gloomiest on record and households have been reining in spending.
Another survey by supermarket group Asda on Wednesday showed UK families were £141 worse off in September year-on-year.
The Accenture data is more pessimistic than a survey published by market researcher Kantar on Monday which said half of Britons plan to spend less on Christmas this year.
Tesco, Britain's biggest retailer, said earlier this month that Britons would still want to celebrate Christmas but would seek to do it in a more affordable way.
