We are able to now bring in the chancellor, Jeremy Hunt. He joins us from Oxfordshire this morning. Very good morning to you, Chancellor.

Morning, Wilfred.

I bet you're pleased by this data.

Well, of course, it's, it's encouraging that the UK economy is growing faster over the last quarter, not just than France, Germany or Italy, but actually faster than the United States. But I think what's more encouraging is the longer term data that we are now seeing about the economy. Since 2010, we have created more jobs in the UK than any other country in Europe. We've attracted more greenfield foreign direct investment, not just than anywhere in Europe, but actually anywhere in the world. Apart from the United States and China, we have a huge technology sector, and the IMF say that over the next six years we will grow faster than any large european economy. So I think that for families who've been having a really tough time, this is an indication that difficult decisions that we've taken over recent years are beginning to pay off and we need to stick with them.

How long do you think before people really feel it and vote according to it? Because clearly the results last week suggest it's not reaching the voter yet.

Well, if you look at what the independent forecasters like the Office for Budget Responsibility say, they say that living standards will return to pre COVID levels next year, which is two years earlier than they thought. I think the biggest pressure on families has been inflation and prices going up. And yesterday the bank of England governor said he expects inflation to return to its target just in the next couple of months. So we're seeing that inflation is falling faster. And I think people recognize it's been a very, very challenging period. But they don't, you know, vote for conservative governments, for us to do popular things. They trust us to do the right thing for the long term benefit of the economy. That is what we've been doing. And the argument we'll be making. You mentioned the election, Wilfred. The argument we'll be making is that going forward, if we want to continue to make the most of our potential as a country, we need to continue to make difficult decisions. For example, on jobs where we have built the most flexible labor market in Europe. Labor want a french style labor market where they have nearly double the unemployment we have, in fact, the unemployment at levels that we had under the last Labor government.

It would be a tragedy if we started to see unemployment going up because of extra burdens on employers who want to bring on more staff.

I'm interested, chancellor, in your first answer, how you brought things to the long term and compared to the United States, real GDP growth since the Conservatives came to office in 2010 has been 22% in total for the UK, 37% for the United States. Whether or not the UK performance is marginally better than the eurozone over the same period, I wonder whether that is all you aspire to deliver or whether the UK can catch up, indeed beat the United States over the next decade after 14 years of trailing it.

Well, that is exactly the right question to ask. I mean, the United States has been the global outlier in terms of its growth rates. And I absolutely want us to be up there with the US. And that's why over the last decade, if you look at what's been really driving the growth in the United States States, there are some things that they do that we do, like having a flexible labor market, but also they have tremendous strengths in the technology industry. And we want the UK to be the world's next Silicon Valley. Over the last decade, we built a tech sector that is double the size of Germany's, three times the size of France, third only to the US and China globally. And that will give us tremendous opportunities because tech is the sector that is growing the fastest and will continue to grow the fastest this, this century.

But. But I guess it's interesting that, you know, it is better than, than some of Europe's tech sectors, but we are monstrously far behind the US. The entire FTSE 100, all sectors included, is worth $2.5 trillion. Just two individual us companies are bigger than all 100 us companies, Microsoft and Apple. A further three are close to being that level and more than $2 trillion themselves. So we're massively behind. And I just wonder what a conservative government would do in the next five year term that clearly has failed to do in the last 14 years.

Well, I don't agree that we failed to do that. What have we done in the last 14 years? We've created more tech unicorns than France, Germany and Sweden combined. The reason that the US stock market has those valuations is because of the seven giant tech stocks. What we want to see is british tech companies listing on the London markets. And I'm very confident we're changing the listing rules this year. And I'm very confident we will start to see that happening rather than what's been happening to date, which is them tending to want to list on Nasdaq. So we're making some very big reforms. My mansion house reforms, which will encourage pension funds to invest more in those high growth british stocks, will also make a difference. But the real point is, if you're looking for where the innovation is happening in technology, I spent last night at Oxford University, which is one of the great tech hubs of the world. Elon Musk says that the two global centers for AI are San Francisco and London. And us companies are investing record amounts in life sciences, technology, film and tv in the UK because they know this is where the innovation is happening.

And outside the US, this is where the most respected universities are in the world and where the new ideas are coming from.

Chancellor, I wanted to ask about national insurance, and if you could just clarify once and for all what is a long term ambition versus a specific policy? I know you want to get rid of national insurance ultimately, but by when?

We haven't set a date. Because we don't know the answer to that question. Because we said we'll only do it when it's affordable and when we can do so without impacting on public services. But if I give you an example, Wilfrid, of what I mean by an ambition. When this conservative government came to power, or an earlier version of the conservative government came to power in 2010, we said we wanted to raise the thresholds before which people pay income tax or national insurance. It was then about 6000 pounds. And over about twelve years we increased that threshold to twelve and a half thousand pounds so that anyone can earn 1000 pounds a month without having to pay any income tax or national insurance. That was a long term plan. We didn't put a time scale on it. But we are saying the same in terms of employees national insurance because we know it's good for growth. The four percentage cuts that we've done in employees national insurance to date means that we will get about 200,000 more people into the labor market, or the equivalent of that fills one in five vacancies. It's good for growth.

And that's really one of the big dividing lines in british politics today, because the Labor Party don't want to bring down the tax burden. Rachel Reeves gave a speech for a whole hour about her economic policy. She didn't mention bringing down the tax burden once. But conservatives look around the world. They look at countries like America, which we've been talking about. They look at countries in Asia and they say that kind countries with lower tax burdens tend to have more dynamic economies and grow faster. And that is why we are prepared to do the hard work as a conservative government to bring down that tax burden to be restrained in our public spending in order to make sure that.

We continue to grow a tax burden that hit record post world war two levels, of course, under a conservative government. And I do think labor have talked about wanting it to come down. And similarly, with the greatest respect, you know, the National Insurance cut you've just outlined is a pledge without a specific date in mind. I just wonder where.

Wilfrid. Hang on, hang on, hang on. I just need to correct you there. Rachel Reese has not made any commitment to bring down the tax burden. And you talk about the tax burden going up. It's correct. You know, we had a once in a century pandemic. We had a 1970s style energy crisis. It was right to support families and businesses with a temporary increase in taxes. But the big difference between the Labor party and the conservative party is the conservative party says, we now want to do the hard work to bring taxes down again, because we know that is good for growth. And that will mean, in the end, we have more money for precious public services like the NHS, for the armed forces, for our schools and all the other things that really matter.

So the tax burden is about 37% at the moment. Where would it be after another five year conservative term?

Well, I can't answer that question because that's. You know, there are an awful lot of factors that.

What's your target? I think people can expect, chancellor, if Reeves won't even talk about it, would you give us a target of where you'd like to see it?

Yeah. I've said we want to bring down the tax burden. We want to bring down over time, when it is affordable and responsible. We want to bring down employees national insurance to zero. That is a very clear aspiration and I think it illustrates the fundamental dividing line in british politics, which is that we don't think that we should continue to have taxes at their current levels. And we will do the difficult. Make the difficult choices to make sure we can bring down taxes. And we think that we won't just be more prosperous as a country, but we will have more money for public services in the end because we'll grow the economy more.

Just very quickly. Finally, I wanted to ask the level of arguments that are going on in cabinet between tax cuts like this or boosting defense spending. Yesterday, the foreign secretary gave a speech and said, it's the most dangerous world most of us have ever seen. What's the priority within cabinet between the two?

Well, there isn't a conflict between the two. I mean, I've had numerous discussions with admirals and generals. When I was foreign secretary, I argued that we should increase defense spending in various conservative party leadership contests. I've argued that as well. But what every person in the armed services understands is you can only do that with a strong economy. And because of the difficult decisions we've taken to put the economy back on its feet after the pandemic and the energy shock, we're now in a position where we can responsibly afford to increase defense spending to two and a half percent of GDP. And if other european, NATO countries match that, we will see defense spending in Europe go up by more than 140 billion pounds a year. And that sends a very strong message to President Putin that we are standing foursquare behind Ukraine, who are in the front line of defending freedom and democracy.

Chancellor, thank you so much for joining us this morning on Sky News breakfast. A very good morning to you.

Thank you very much.