Chancellor of the Exchequer Jeremy Hunt is expected to announce tax cuts for businesses and tighter spending plans in his Autumn Statement this week, part of a bid to lift growth and boost Rishi Sunak’s ailing Conservative Party.

With the Tories trailing Labour badly in the polls, it’s one of the few remaining set-piece moments before a general election expected next year and Hunt is under pressure to deliver voter-pleasing measures while also keeping a lid on inflation and preserving financial stability.

His and Sunak’s plans have evolved in response to changing economic and political circumstances, becoming increasingly bullish in response to a decline in inflation and better-than-expected growth figures. Sunak on Monday said that after inflation more than halved this year, the government can now start to look at tax cuts — with a reduction in national insurance and a permanent extension of a business investment tax relief now expected.

Here’s what to look out for in Hunt’s statement later Wednesday:

The Big Picture

Hunt is likely to have more than the £6.5 billion ($8.2 billion) of fiscal space he had back in March to play with. He could have as much as £26 billion of headroom against his binding target that debt must be falling as a share of GDP within five years, according to JPMorgan. Bloomberg Economics had estimated the figure at £11 billion, but given all the reporting around budget giveaways now says it may well be higher.

While some of that could be used for crowd-pleasing giveaways, the Resolution Foundation has called the numbers a “fiscal illusion” based on commitments made for the years after the election that are unlikely to be met.

Departmental spending plans, including a real-terms increase of just 1% a year beyond 2025, were already tight before larger-than-planned public sector pay awards this year. Resolution has called the current plans “implausible,” while the Institute for Fiscal Studies says further unspecified spending cuts are not credible.

Meanwhile, the tax burden in March was on track to hit its highest level since World War Two, at 37.7% of economic output. Fiscal drag, a scheduled six-year freeze on income tax thresholds, will raise £40 billion a year as the state captures more of people’s pay, the Resolution Foundation estimates. The government is keen to reduce the tax burden.

Taxes

Income Tax & National Insurance

Expectations have grown that Hunt will announce cuts to income tax or national insurance, a form of payroll tax, a possibility he didn’t rule out when questioned over the weekend. The Times on Wednesday said Hunt is likely to cut national insurance.

When Chancellor, Sunak said he’d reduce income tax by a penny in the pound in 2024, and during his pitch to be Tory leader he said he’d reduce the rate by a further three percentage points to 16% by 2029.

Yet Hunt has also struck a cautious tone on tax cuts that would fuel rising prices — which is true of both income tax and national insurance.

Stamp Duty

Treasury officials have been drawing up options around potential cuts to stamp duty, a tax on property purchases. The measure is seen as less inflationary than other tax-cutting options. Possibilities include maintaining the £250,000 nil-rate threshold beyond 2025, when it is due to drop to its previous level of £125,000, and tweaking other reliefs.

Inheritance Tax

Hunt and Sunak had been considering cutting inheritance tax in the Autumn Statement, but the plan looks increasingly unlikely given criticism from Conservative MPs. Backbenchers have expressed concern that the move would appear politically tin-eared if announced alongside cuts to welfare spending.

Business Tax Cuts

The government’s full-expensing tax break for business investment, 25p of relief on every £1 invested, is the centerpiece of its growth strategy. It’s due to expire in April 2026, but Hunt has said his priority is to make it permanent, and a person familiar with the matter has told Bloomberg he’ll do just that on Wednesday. It costs £10 billion in the first year, diminishing over time.

He is also expected to extend business rates relief for the hospitality sector and small businesses on Wednesday, but is due to hit larger retailers and supermarkets with higher tax bills as a post-pandemic relief expires.

Fuel Duty

Fuel duty is due rise in line with the retail prices index of inflation and a temporary 5p a liter cut is meant to reversed. The government has not delivered a scheduled increase in fuel duty for over a decade and is not expected to do so in the Autumn Statement. Scrapping the plans will cost £4 billion.

Spending

Welfare Cuts

A key obstacle to growth has been the fall in workforce participation since the pandemic, as half a million people dropped out with long-term sickness. The government has announced a series of polices to help people back to work alongside a tougher sanctions regime for people who are “taking taxpayers for a ride,” Work and Pensions Secretary Mel Stride said.

By making it harder to claim benefits, the government may save around £2 billion. Expectations had built that ministers would raise working age welfare by less than the usual benchmark of September inflation. According to the Times on Tuesday, that’s now unlikely, as is another plan that had been floated to use a different measures of wages to inform a rise in the state pension.

Growth Measures

Companies will be able to draw down surpluses from their defined benefit pension funds to invest in projects as part of a package of “productive finance” reforms to boost growth. The UK pension lifeboat, the Pension Protection Fund, will also get new powers to consolidate smaller private sector retirement plans to create a bigger pot of money for infrastructure projects and startups. Other proposals to pool local government pension plans to create another large pot of investment finance are likely.

Another of Hunt’s growth initiatives will be to speed up connections to the electricity grid, an issue that’s a major bugbear for green industries. The government also wants to clear blockages in the planning system and use artificial intelligence to increase public sector productivity.