Jeremy Hunt has said that tax cuts will be “virtually impossible” to deliver until the UK economy improves.
The Chancellor said there was no “extra headroom” to reduce taxes, ahead of November’s autumn statement.
Reducing inflation is instead his main priority, after Rishi Sunak pledged to bring down inflation this year to around 5.3 per cent.
Yesterday, the Bank of England decided to not to raise interest rates, the first time the base rate has remained unchanged in nearly two years.
WATCH NOW: Interest rates remain at 5.25 per cent
The steady rate means that the cost of national borrowing did not increase as many had expected it would.
This raised the possibility that the Treasury will have more wiggle room to bring in tax cuts.
As well as the base rate being held as it is, a surprise fall in inflation rates in August and government borrowing coming in lower than anticipated had raised hopes that the Chancellor may reduce the tax burden.
However, the Chancellor said he still had some “very difficult decisions” to make regarding the economy.
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Fellow Tory MPs have argued that keeping taxes as high as they are will be a detriment to the Conservative party ahead of the next election.
Former Prime Minister Liz Truss is among those who is demanding that the Treasury bring down the tax burden in the autumn statement.
However, it is likely that they will have to wait until the Spring Budget – when the government is expected to slash taxes in a bid to secure favour ahead of the general election.
Discussing the recent speculation that taxes might get cut, Hunt said to Andrew Marr on LBC: “I really, really wish it was true but unfortunately, it just isn’t.
“If you look at what we are having to pay for our long-term debt, it is higher now than it was at the Spring Budget.”
Many had expected taxes to be cut after the Bank of England announced interest rates would not increase
PA“I wish it wasn’t, it makes life extremely difficult, it makes tax cuts virtually impossible, and it means that I will have another set of frankly very difficult decisions.
“All I would say is, if we do want those long-term debt costs to come down, then we need to really stick to this plan to get inflation down, get interest rates down.
“I don’t know when that’s going to happen. But I don’t think it’s going to happen before the Autumn Statement on Nov 22, alas.”
Many economists and investments experts have said the 5.52 interest rate is likely to hold for the foreseeable.
Samuel Tombs, from Pantheon Macroeconomics, said the Bank of England was “probably done” with interest rate increases.