The Chancellor, in comments first reported by The Times, told colleagues: “We are not likely to have as much room for tax cuts as we had in the autumn.”
During his economic analysis, the PA news agency understands the senior Conservative pointed to “major structural weaknesses” in the UK economy as being a factor, highlighting how the US, France and Germany are all more productive.
The comments come after the International Monetary Fund (IMF) on Tuesday warned further tax cuts could risk the Government’s ability to invest money in the NHS and other vital services.
Mr Hunt cut national insurance in the autumn statement in November, a move the Office for Budget Responsibility thinks will cost the Treasury around £9.76 billion in the 2028 tax year.
In a reduction that came into force on January 6 and is being felt in pay packets this month, the main rate of national insurance was sliced by two percentage points, from 12% to 10%.
The Treasury says the change means a worker on a £35,000 salary will be £450 better off a year.
Ahead of a likely election later this year, Mr Hunt appears keen to cut taxes even further if he can, in a bid to boost the Conservative Party’s chances of pulling off a shock victory.
Prime Minister Rishi Sunak’s party has been consistently behind Sir Keir Starmer’s Labour in opinion polls for more than a year, trailing by as much as 20 points in some surveys.
Speaking earlier this month during a visit to the World Economic Forum in Davos, Switzerland, the Chancellor said “the direction of travel” is for the UK to emulate successful low-tax economies.
Economists have said the fact that the Government borrowed less than expected in December might give the Treasury chief the cover he needs to slash taxes further in the Budget on March 6.
Yet December’s figures from the Office for National Statistics said debt levels are higher than they have been since the 1960s when compared with the size of the economy.
Responding to the IMF’s briefing on Tuesday, Mr Hunt said it was “too early to know whether further reductions in tax will be affordable in the Budget”.
He said it continued to be Government thinking that “smart tax reductions can make a big difference in boosting growth”.
There has been clamour within Tory ranks for Mr Hunt to offer up headline reductions in tax in March as part of a pitch to woo voters.
Health minister Dame Andrea Leadsom, asked on LBC whether she wants to see further tax cuts, said it is the Chancellor’s ambition to “enable people to keep more of their hard-earned cash”.
She said: “I think there is no denying that tax cuts enable, facilitate economic growth.
“The ‘full expensing’ for businesses that the Chancellor introduced last year, the biggest ever tax cut, as I understand it, for businesses, will generate economic growth.
“I am a big fan of tax cuts but obviously I am not the Chancellor and cannot predict what steps he will be taking at the spring statement, which is quite soon now.
“But he will be looking to enable people to keep more of their hard-earned cash if he possibly can.”
The IMF has downgraded the UK’s growth forecast for next year. The body’s economists expect UK growth to hit 0.6% this year, and 1.6% next.
It would make the economy the second-worst performer in the G7 this year and the joint third-worst performer in 2025.
The IMF’s forecast for this year is unchanged since its last report in October, but has been downgraded by 0.4 percentage points for next year.
But the IMF said that change is largely due to a revision to official data, rather than a worsening economic situation.