The daunting fiscal issues facing the UK’s next chancellor

theguardian.com:

The chancellor picked by Britain’s new prime minister will face a daunting array of issues from the moment he or she takes office.

Whoever takes the hot seat in the Treasury will find themselves in a similar position to Rishi Sunak in March 2020 when the pandemic hit and the economy faced being shutdown for several months.

Nadhim Zahawi, the current chancellor, is widely expected to be replaced under a Truss or Sunak government. In his final weeks, the Treasury has been drawing up a menu of options for the incoming prime minister to tackle the cost of living crisis.

Here we outline the top agenda items:

Both Truss and Sunak have pledged help for families bracing for the typical energy bill rising to £3,549 from October, at a time when inflation is already above 10% and some economists say it could hit 22% – close to a postwar high – if high oil and gas prices are sustained.

Any package would probably build on or replace the £15bn of support announced by Sunak in May, reflecting continued sky-high prices in wholesale energy markets seen over recent months amid Russia’s war in Ukraine.

The Resolution Foundation has warned families will see their spending power cut by £3,000 on average by the end of next year, unless the new government acts to counter the biggest hit to living standards in a century. Forecasts from Cornwall Insight show the Ofgem price cap could come close to £7,000 for a typical bill by autumn next year, more than six times the level a year ago.

Truss committed in the Tory leadership campaign around £30bn to reversing Sunak’s rise in employee national insurance payments earlier this year, cuts to income tax and a pledge to block a rise in corporation tax.

Sunak has pledged to increase a £650 payment due this