Baffling Brexit plan will devastate trade, says M&S chief

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Tensions over economic policy and the timing of tax cuts will dominate the debate ahead of the March 15 budget.

Mr. Sunk and Mr. Hunt have both said repeatedly that they want to cut taxes when they can, but argue that the priority now must be to bring inflation down, which is around 10% annually.

Government figures continue to point to the implosion of Truss’s tax-reducing “mini” budget last fall, which sent the pound falling and interest rates higher, leading to her ousting from No. 10.

Mr Hunt will reiterate that message in a speech designed to counter calls for tax cuts in his March budget and underscore pressure on Treasury revenues.

A source at the Treasury Department told The Daily Telegraph: “The biggest barrier to economic growth is 10 percent inflation. You can’t grow the economy with such high inflation. It is the cause of industrial unrest, it is eroding the pound in people’s pockets and straining public services. You can have a thousand policies to promote growth, but without addressing inflation none will work.”

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Trying to ensure Northern Ireland can trade freely with the mainland UK while avoiding physical checks at the border with Ireland has been one of the thorniest Brexit issues.

A customs border along the Irish Sea was effectively created when the UK signed the Northern Ireland Protocol, which set out the province’s post-Brexit trading terms.

Since then, both Liz Truss and Mr Sunak have attempted to renegotiate that deal, with the UK threatening to unilaterally change the terms of trade unless a new agreement is reached.

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Under pressure from Washington DC, Sunak hopes to reach agreement on a new deal in April, in time for the 25th anniversary of the Good Friday Agreement, a historic moment in the peace process.

The use of different product labels could in theory ease the need for customs controls at the border. But Mr Norman argues in his letter that the cost to producers is skyrocketing.

At one point he warns: “An expensive labeling solution means customers are hit by smaller ranges, higher prices – at a time of massive inflation and when the economy in Northern Ireland is already at a disadvantage – and a deterioration in availability. “

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In another, he says: “This proposal adds cost, labor and complexity at a time when the supply base really doesn’t need it and struggles to stay afloat, to the specific benefit of EU producers.”

The exact labeling changes proposed by London and Brussels are unclear, as talks remain behind closed doors – although some form of change has been mooted publicly.

Meanwhile, the Treasury’s approach to meeting the twin challenges of lowering inflation and minimizing the recession forecast for this year has recently drawn criticism from senior business executives.

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