UK's Sunak says the economy's fundamentals are strong

FILE PHOTO: UK economy narrowly avoids a recession

PARIS (Reuters) - Prime Minister Rishi Sunak said on Friday that recent indicators showed the underlying fundamentals of Britain's economy were strong, ahead of his finance minister Jeremy Hunt's budget statement next week.

"I think the underlying fundamentals of the economy are strong, I really do," Sunak told reporters on a trip to Paris to meet French President Emmanuel Macron.

"If you look at some of the things that have been coming out in the last month ... they're all showing encouraging signs that things are better than people had feared, that sentiment is improving, confidence is returning."

Sunak said borrowing costs had fallen after surging last year when his predecessor Liz Truss and her finance minister Kwasi Kwarteng announced big, unfunded tax cuts.

"Those are all positive signs. They show our plan is working, that it's the right one, and we need to stick to it. But beyond that, I'll leave it to the chancellor next week."

Hunt is expected to avoid announcing big changes in tax and spending in his budget plan on Wednesday, with many analysts saying he will probably keep his fiscal options open until nearer to the next national election expected in 2024.

(Reporting by Alistair Smout; Writing by William Schomberg; Editing by David Milliken)