Truss — who won the leadership of the Conservative Party barely a month ago after promising to slash taxes — fired Kwarteng on Friday and has ditched key parts of the programme they agreed together…reports Asian Lite News
Britain’s new Finance Minister Jeremy Hunt promised to win back the country’s economic credibility by accounting for every penny of the government’s tax and spending plans, while insisting that his boss Prime Minister Liz Truss remained in overall charge.
Truss appointed Hunt on Friday in an attempt to rescue her leadership as confidence in her ability to run the country drained away within both her own Conservative Party and international financial markets.
Investors have sold British government bonds heavily since September 23 when Mr. Hunt’s predecessor, Kwasi Kwarteng, announced a string of unfunded tax cuts without publishing a set of independent economic forecasts.
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The knock on effects forced the Bank of England to make an emergency intervention to protect pension funds and drove up mortgage costs — adding to the squeeze on Britons’ finances.
“No government can control the markets. No Chancellor should seek to do that,” Mr. Hunt told BBC television in an interview broadcast on Sunday.
“There is one thing we can do and that’s what I’m going to do, which is to show the markets, the world, indeed people watching at home, that we can properly account for every penny of our tax and spending plans.”
Britain’s economy is at risk of going into recession at the same time as the Bank of England is raising interest rates to control soaring inflation. Bank of England Governor Andrew Bailey said on Saturday he thought a big increase in interest rates would be needed in early November.
Truss — who won the leadership of the Conservative Party barely a month ago after promising to slash taxes — fired Kwarteng on Friday and has ditched key parts of the programme they agreed together.
The chaos has fuelled discontent in the governing party, which before Friday was already splintered and falling far behind the Opposition Labour Party in opinion polls. Sunday’s newspapers were rife with stories of plans to replace Truss.
Even US President Joe Biden criticised Truss’s original economic plan as a mistake.
“I think that the idea of cutting taxes on the super wealthy at a time when — anyway, I just think — I disagreed with the policy, but that’s up to Great Britain to make that judgment, not me,” he said.
After effectively dismantling Truss’s gamble that tax cuts would spur increased growth and pay for public spending, Hunt has said he will go further including imposing tighter spending controls and some tax rises.
“I’m going to be asking every government department to find further efficiency savings,” he said, adding that while he wanted to keep other tax cuts the government has promised, he ruled nothing out in his drive to balance the books.
He said he would set out the details in a fiscal statement already scheduled for October 31.
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