JEREMY Hunt today warned Brits to "hope for the best but prepare for the worst" ahead of November's Autumn Budget.
Speaking from Marrakech, Morocco, where he is meeting International Monetary Fund chiefs, the Chancellor revealed the government's debt interest is likely to be £20 to £30 billion higher than predicted in the spring.
The soaring costs for the public purse make the prospect of tax cuts and spending on the NHS and schools in the Autumn Budget far less likely.
Mr Hunt said tragic events such as the war in Israel and Ukraine have serious snowball effects on Britain's economy.
He stressed that hard-up households face a "very challenging environment" in the short term, but added there's "a great deal of confidence" about the longer-term future.
"In the short term, we have challenges," the Chancellor said.
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"We have a challenge with inflation, which is still too high.
"And we have the challenge of the international environment where there is still a lot of shocks."
He added: "I need, as Chancellor, to focus on reliance in the face of those shocks.
"I am very much hoping for the best, but I do need to prepare for the worst, because I think we can see that the world is a very dangerous place right now."
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Asked whether Brits can expect good or bad news in the Budget, which will be revealed on November 22, Mr Hunt replied: "I think it's a bit of both.
"I think the British economy compared to when I became Chancellor a year ago has proved to be much more resilient than nearly every international organisation predicted, and people are looking at some of the underlying strengths."
Last month at Tory Conference Mr Hunt declared that no major taxes will be slashed in the Autumn Budget.
Rishi Sunak hinted at possible desperately desired cuts before the next general election.
But the pair both say that inflation has to come down much further before rates are changed.
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