Jeremy Hunt scraps Liz Truss’ ‘minimum budget’ economic agenda

Treasury Secretary Jeremy Hunt announced a huge U-turn to “give certainty” about public finances and calm markets in a video statement made on Monday.

The move was seen as a major blow to the already under-pressure Truss hold on power after assuming the role with minority support from Tory MPs, weakened only by the reaction to controversial tax measures. turned into

Truss has already scrapped plans to abolish the country’s top tax rate, in a big break for the wealthiest Britons, and on Friday scrapped plans to cut corporate taxes.

Abandoning plans to eliminate the 45% tax rate on incomes over £150,000 ($271,000) — imposing the same 40% tax rate on everyone earning over £50,000 — would cost around £2 billion will be required.

It’s just part of Truss and Kwarteng’s underfunded plan to deliver a £45bn ($81.3bn) tax cut that will send the pound to record lows and trade against the US dollar within days. The Bank of England should take urgent action with a loss of 7 pence.

But the “tax cuts for the rich” focused public anger during a cost-of-living crisis, leaving poor citizens wondering how they would pay for their heating bills during the winter months.

The proposal was dropped during the Conservative Party’s annual general meeting, but was not enough to calm the market, leading to further setbacks and the eventual dismissal of Kwarten and replacement of Hunt.

Hunt’s move to scrap “nearly all” of the tax measures announced in the government’s “mini-budget” last month includes changes to payroll taxes, a VAT-free shopping regime for foreign tourists, and alcohol freezing included. custom rate.

He said health and social security taxes would continue to be abolished and stamp tax changes would continue to be made.

Hunt said the energy price guarantee, introduced in the face of rising energy costs caused by Russia’s war against Ukraine, will only last until April, after which the government will look for cheaper options.

“Government’s central responsibility is to do what is necessary to stabilize the economy,” Hunt said.

“This is essential for businesses making long-term investment decisions and families worried about jobs, mortgages and living expenses,” he said.

“No government can control markets, but all governments can provide certainty about fiscal sustainability. That is one of many factors that influence how markets behave. It’s one.”

In addition to abolishing the cuts, Hunt said all government departments will need to “double down” their efforts to find savings and “will need to cut some spending.” .

“It’s a deeply held conservative value, and one I share, that people should keep more of their hard-earned money,” Hunt said.

“But it is not right to borrow to fund this tax cut at a time when the market justifies a commitment to sustainable finances.”

Truss, who has previously refused to disclose the source of the tax cuts, said in Congress that he would “absolutely” honor the leadership campaign’s promise not to cut services.

A U-turn called “complete humiliation”

Labor Shadow Treasury Secretary Pat McFadden said the move was a “complete humiliation” for Truss.

“The platform she fought and won in the Conservative leadership election caused three weeks of economic turmoil, repeatedly intervening on behalf of the Bank of England and pushing up mortgage rates,” he told the BBC.

“The damage has already been done. She is in an impossible position where the survival of the government depends on publicly burning everything she believes in.

“So today is a humiliation for her. You must be afraid you will have to pay. Come on.”

Backventure’s Crispin Brandt became the first Tory lawmaker to publicly demand Truss’ resignation on Sunday, sustaining his criticism on Monday.

“If your credibility as prime minister is in the single digits, your position is frankly irrevocable,” he told the BBC.

“And there is no time right now to waste the next few years trying to see if Liz can be rehabilitated as prime minister and party leader so that she can win the public’s trust.

“We have to make a change.”

Immediately following a change in prime minister and just a few weeks after Truss took office, many Tories insist on replacing leadership again, and cannot provide the stability the country needs.

Boris Johnson supporter Nadine Dries suggested the party had only three options.

Truss assumed Tory leadership on the back of promises of tax cuts

Tax cuts were a central plan in the Truss’ campaign to replace Johnson as the nation’s leader after he resigned in the face of a series of scandals.

A majority of parliamentarians voted for former Prime Minister Rishi Sunak to lead the party, but after a summer (southern hemisphere winter) election campaign, the Truss won the vote of about 170,000 Conservatives.

The pound and London’s FTSE 100 rose slightly following Hunt’s announcement.

The government will announce its “mid-term financial plan” on October 31.

– Report to Associated Press