Rishi Sunak, the new prime minister, has paved the way for painful cuts and tax rises to plug a budget hole of between £30bn and £40bn, including the possibility of real cuts to pensions and benefits. Hunt announced on Wednesday morning that he will make a full autumn statement, including official forecasts, on November 17 and has warned of “strictly” tough choices ahead. City traders say Sunak and Hunt have created a “boring dividend” by calming markets after the chaos of Liz Truss’s brief premiership, which led to lower government borrowing costs. This means the fiscal gap will be smaller than previously thought. However, the scale of the challenge is still huge: Sunak warned on Tuesday that the country faced “a deep economic crisis”. On Wednesday Sunak refused to commit to upgrading benefits in line with inflation, while Downing Street refused to say whether the “triple lock” on pensions contained in the Tories’ 2019 manifesto remained sacrosanct. Last week Mr Truss said the triple lock, under which the state pension rises every April in line with the higher of inflation, pay rises or 2.5%, would remain in place. However, Sunak insisted, in his Prime Minister’s Question Time debut: “I will always protect the most vulnerable.” Pensions will rise by 10.1 percent next April, in line with September’s inflation rate, unless Sunak reverses course. The most significant savings for the Hunt could be achieved by limiting spending on public services in the period after the current spending plans end in 2024-25. Labor said this would mean years of austerity. If the government kept real spending increases, it could save around £10 billion a year by 2027-28, rising to £20 billion a year if it opted for flat-rate spending plans in real terms. Government borrowing costs rose slightly in response to the announcement of a delay in the debt-cutting plan, before a global bond rally pushed them lower again. The 30-year Treasury yield rose as much as 0.11 percentage point before settling at 3.67 percent, little changed on the day.

The odds remain well below the levels reached on Friday, before Sunak emerged as the only candidate to replace Liz Truss as prime minister. Hunt allies said delaying the budget plan – now officially a fall statement – would allow the independent Office for Budget Responsibility to reflect stability in bond markets when making its forecasts for public finances. The OBR said on Wednesday it would have to use data on financial markets and energy prices from “early to mid-October” if the budget statement was on 31 October. This would have significantly boosted forecasts of government debt interest costs, because the period covered dates of deep stress in the pocketbook market. However, the new date will complicate the Bank of England’s interest rate decision, which is due on November 3. BoE governor Andrew Bailey said the central bank would be “blindsided” if it had to set interest rates before knowing the government’s fiscal plans. November 17 is the fourth date given by the government for the crucial medium-term budget plan, which is expected to set out a five-year program to control borrowing. Meanwhile, Robert Steeman, who is responsible for managing bond sales on behalf of the government, told MPs that the chaos in the gold market following last month’s “mini” budget was “without a doubt” the result of domestic factors . Truss and former chancellor Kwasi Kwarteng had claimed their economic policies had been derailed by world events, although they admitted they had failed to prepare the ground for the radical £45bn debt reduction plan.