U.K. politicians have backed away from the proposed mini-budget after weeks of financial chaos.
Key Details
- The new Chancellor of the Exchequer Jeremy Hunt has announced that the U.K. will back away from key elements of the Prime Minister’s plans for tax cuts.
- As we reported, Hunt was appointed to replace the former treasury chief on Friday after Prime Minister Liz Truss fired him.
- Hunt announced that the government would reverse many of the tax packages and tax cuts announced last month in the hope that the move will provide stability.
- “It is a deeply held conservative value, a value I share, that people should keep more of the money they earn, but in a time when markets are rightly demanding commitment to sustainable public finances, it is not right to borrow to fund this tax cut,” says Hunt.
- Truss has not addressed the public yet, with her advisors saying she is managing urgent business.
- Hunt is also scrapping some of the energy price control plans. More measures will be announced on October 31.
Why it’s news
The walking back signals a major failure for the prime minister’s government as her first major plans have been thoroughly discredited and harshly reviewed.
Truss and Hunt haven’t backed away though from their commitment to financial growth.
“The British people rightly want stability, which is why we are addressing the serious challenges we face in worsening economic conditions. We have taken action to chart a new course for growth that supports and delivers for people across the United Kingdom,” says Prime Minister Truss.
Backing up a bit
As we previously reported, Truss’s mini-budget caused weeks of chaos and economic turmoil in which the Bank of England raised interest rates, the pound crashed, and bond prices dropped—forcing the bank to step in and calm the panic by printing $70 billion to buy them. She attempted to stay the course and weather the chaos until her planned speech in November.
Truss fired treasury chief Kwasi Kwarteng on Friday—just weeks after they both took office. It was a significant setback for her government, which is still facing global scrutiny.
Liz Truss assumed office on September 6, 2022, and has an approval rate of 16% in the U.K.
