Chancellor of the Exchequer Jeremy Hunt has torn up the remnants of Prime Minister Liz Truss’ controversial economic programme, abolishing tax cuts and scrapping support for household energy bills in a bid to put the UK’s public finances back in order.
After backlash against Truss’s plan pushed up the cost of borrowing for the UK government, the £32 billion ($36 billion) package is less than half what economists say the government may need to fight public debt on a stable course after rising inflation and faltering growth squandered tax revenues.
Along with previous U-turns, the decisions reverse almost all of the £45billion in tax cuts and freebies Truss announced in September and raise questions as to whether she can survive in office. The only major changes remaining from this announcement are those already halfway through the legislation on social security contributions and stamp duties.
Hunt signaled he’s likely to make deeper spending cuts in the coming weeks.
“I fear there will be harder decisions, both tax and spending, as we meet our commitment to reducing debt as a share of the economy over the medium term,” Hunt said, adding that protection will be a priority.” most vulnerable.”
UK government bonds and the pound rallied sharply, with the 30-year gilt yield falling as much as 44 basis points at times. That would be the second largest daily decline on record if the debt were closed at this level.
Truss’s energy support system has also been trimmed. The current price freeze, which caps the average bill at £2,500 a year for two years, will be reviewed in April when it will be redesigned to target more vulnerable households and “incentivize more energy efficiency”.
Hunt will give more details to the House of Commons in London on Monday at 3:30 p.m. He also intends to present a full financial plan on October 31.
The chancellor’s announcement caught Truss’s team off guard, a clear sign of how power and authority have drained from the prime minister’s office.
On Sunday afternoon, No. 10 told reporters that the Prime Minister would hold a cabinet reception on Monday night to get their views on the Chancellor’s proposals before the Treasury Department decides to move faster.
Even basic operating agreements show who is in control now. No. 10 could not initially confirm whether the usual Monday morning press conference would be held for reporters before checking in with Hunt’s team.
Truss will have dinner with her cabinet later Monday and meet with the One-Nation Caucus at 6 p.m. This is the group of moderate Tory MPs seen as their greatest threat. Some MPs have publicly called for her ouster and many more are plotting behind the scenes.
https://www.independent.ie/business/world/hunt-ditches-entire-truss-program-in-bid-to-save-uk-credibility-42072601.html Hunt drops the entire Truss scheme to save UK credibility