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Jeremy Hunt, the new British finance minister, scrapped Prime Minister Liz Truss’s economic plan and cut the energy subsidy, a huge fiscal policy shift to try to regain investor confidence.
It was on September 23rd that Liz Truss, the UK Prime Minister, and her former Finance Minister Hunt, Kwasi Kwarteng, announced £45bn in unfunded tax cuts, causing a historic drop in the pound against the dollar and a stir. in the financial markets that required the intervention of the Bank of England to contain the damage.
This Friday, Truss made Kwarteng resign to appoint Hunt, who today, October 17, reversed all the policies that helped Truss reach the post of prime minister just under six weeks ago.
“I continue to have great confidence in the UK’s long-term economic prospects as we deliver on our mission of betting on growth,” Hunt said in a televised video. “But growth requires trust and stability, and the UK will always pay its way,” she added.
Hunt said the planned changes to the tax cut would raise £32bn, about $36bn each year. Following the announcement, the British pound soared as much as 1.4%, hitting a session high of $1.1332.
“We have taken steps to chart a new course for growth that supports and deliver on people across the UK,” Truss reacted on Twitter, saying he is charting a new course for growth.
Hunt was quick to reverse policies and find spending cuts to calm markets and prevent borrowing costs from continuing to rise Monday, but 10-year gilt yields remain around 46 basis points. above its closing level on September 22, the day before the “Growth Plan” surprised the markets.
Truss’s spokesman was asked how the prime minister could retain any credibility after backing away from the program that secured her election by party members.
“He’s making the tough decisions that are necessary to change our focus so that we can provide economic stability and maintain that stability of leadership which is also important,” he replied.
Now several legislators are in favor of leaving the post. Rachel Reeves, finance spokeswoman for the opposition Labor Party, said the Conservative government is no longer capable of providing stability.
The new finance minister will present a more comprehensive medium-term fiscal plan on October 31, along with forecasts from the independent Office for Budget Responsibility, according to the Treasury.
with Reuters
