Chancellor Jeremy Hunt has unveiled a £55 billion package of tax hikes and spending cuts as he warned the UK would have to weather an economic “storm”.

Mr Hunt insisted that his autumn statement was not a return to austerity but said that “difficult decisions” were necessary in order to tackle inflation, now at a 41-year high.

He told the House of Commons: “In the face of unprecedented global headwinds, families, pensioners, businesses, teachers, nurses and many others are worried about the future.

“So today we deliver a plan to tackle the cost-of-living crisis and rebuild our economy.

“Our priorities are stability, growth, and public services.

“We also protect the vulnerable because to be British is to be compassionate and this is a compassionate Conservative government.”

The chancellor warned that “high inflation is the enemy of stability” as it sends food and fuel bills soaring, causes businesses to fail and increases unemployment.

“It erodes savings, causes industrial unrest, and cuts funding for public services. It hurts the poorest the most and eats away at the trust upon which a strong society is built,” he said.

“Families across Britain make sacrifices every day to live within their means, and so too must governments because the United Kingdom will always pay its way."

Eastern Daily Press:

What did Jeremy Hunt announce in today's autumn statement?

Mr Hunt set out a package of £30 billion of spending cuts and £24 billion in tax rises over the next five years.

His package is in stark contrast to his predecessor Kwasi Kwarteng’s ill-fated plan for £45 billion of tax cuts, less than two months ago, which spooked the markets, pushed up the cost of borrowing and contributed to the downfall of Liz Truss’ short-lived administration.

Among the policies announced by the Chancellor was an increase in the energy windfall tax on profits earned by oil and gas companies from 25pc to 35pc.

Meanwhile, some of the country’s highest earners will pay more tax as the top rate of tax threshold is lowered from £150,000 to £125,140, meaning those earning more than £150,000 will pay an extra £1,200 a year.

Mr Hunt also announced income tax personal allowance threshold would be frozen until 2028, meaning millions will end up paying more in tax.

Freezing the threshold means that tax bands will remain the same, even as wages go up.

The threshold was initially frozen until 2026.

Tax as a percentage of GDP will increase by just 1pc over the next five years, Mr Hunt said.

He said he would also reform allowances on unearned income, noting: “The dividend allowance will be cut from £2,000 to £1,000 next year and then to £500 from April 2024.

“The annual exempt amount for capital gains tax will be cut from £12,300 to £6,000 next year and then to £3,000 from April 2024. These changes still leave us with more generous allowances overall than countries like Germany, Ireland, France, and Canada.”

Jeremy Hunt said he would continue to maintain the defence budget at “at least 2pc of GDP”.

On education, the chancellor revealed school budgets would increase by £2.3 billion per year.

The NHS England budget will also be increased by £3.3 billion over the next two years, while there will be an extra £4.7 billion for social care.

The Barnett consequentials mean a further £1.5 billion for the Scottish government, £1.2 billion for the Welsh government, and £650 million for the Northern Ireland executive.

Mr Hunt also announced the government would proceed with a new nuclear power plant at Sizewell C in the southeast of England, creating 10,000 skilled jobs, and providing power to the equivalent of six million homes over 50 years.