Europe

PM rivals Johnson, Hunt vow UK cash splash

Boris Johnson and Jeremy Hunt have both talked up public spending in their race for the leadership. (AAP)

The rivals to succeed Theresa May as Conservatives leader have set out plans to win broader political backing by investing in education, transport and defence.

Boris Johnson and Jeremy Hunt vowed to spend billions of pounds on public services, infrastructure and tax cuts as the two men battling to become prime minister pitched themselves as the best candidate to take on the opposition Labour Party.

The rivals to succeed Theresa May as leader of the ruling Conservative Party set out plans to win broader political backing by investing in education, transport and defence, even if that means higher government borrowing. The race should be over by July 23.

Johnson, the favourite, vowed to increase spending on education, adding to earlier pledges to invest in transport, superfast broadband, more police and tax cuts.

Foreign Secretary Hunt pledged to slash corporation tax, even in the event of a disorderly no-deal Brexit, to drive economic growth and generate the funds to invest more in social care, defence and education.

"Believe me there is cash now available," Johnson told Sky News. "(And) I'm prepared to borrow to finance certain great objectives but overall we will keep fiscal responsibility."

With Britain now due to leave the European Union on October 31, much of the debate has revolved around how the two candidates would steer the world's fifth-largest economy out of the world's biggest trading bloc without crippling growth.

With the winner decided by Conservative Party members, who overwhelmingly back Brexit, Hunt has toughened his language, saying he would take a decision at the beginning of October to go for a disorderly no-deal exit if there was no prospect of getting an agreement through parliament.

The self-proclaimed entrepreneur said a cut to the corporate tax rate to 12.5 per cent, matching the level in Ireland and one of the lowest in any major economy, would become even more important in the event of a no-deal because it would support companies through the upheaval. The rate is currently 19 per cent.

"If we had a no-deal Brexit then some of these spending commitments would have to wait because you would have to divert money to support businesses up and down the country," Hunt told BBC TV. "I wouldn't drop them but they would take longer.

"(But) of those commitments, the one I would not drop is the one to reduce corporation tax. It would fire up the economy in a way that would be helpful in a no-deal context."

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