He did not ignore it: “almost all” controversial tax plans that were energetically announced three weeks ago, the new British Chancellor of the Exchequer Jeremy Hunt said in a video message on Monday. It is a major defeat for Prime Minister Liz Truss, but according to Hunt the government must “do what is necessary for economic stability”. Because that is at stake: after the announcement of tens of billions in tax cuts, there was great concern about how the government was going to finance them. The exchange rate of the British pound took a nosedive and government bond yields shot up. The British central bank had to step in to assuage the panic somewhat. Actually, the substantiation of the plans would only come in two weeks, but waiting for that became less logical by the day. The aim of Hunt’s hasty TV speech – the British press calls it an ‘ emergency statement ‘ – was to calm the financial markets. That seems to have worked out reasonably well: the pound rate rose and interest rates fell. Short work Hunt’s speech marks the definitive end of the ‘mini-budget’ that the Truss administration launched in September, after all the commotion had already cut important parts. At the beginning of this month, Truss and the previous Minister of Finance, Kwasi Kwarteng, already decided not to abolish the tax rate for the highest incomes of 45 percent. Last Friday it was reported that the corporate tax rate would rise to 25 percent, instead of freezing it at 19 percent. That was just hours after Kwarteng—a close friend of Truss’s and the man responsible for carrying out her economic ideas—had been sacrificed to restore peace. As the markets remained volatile, Jeremy Hunt made short work of the other contentious parts on Monday. For example, the plan to lower the basic income tax rate from 20 percent to 19 percent has been dropped. Because while Hunt also believes that people should have more of the money they earn, he also believes that it is “not right” to borrow money to finance this tax cut. And the measure that received the most support in society, help for Britons to pay their energy bills, has also been changed. Hunt announced that the aid announced in September will continue through April, but likely not in this form after that. In fact, this support was promised for two years. Also read this analysis about the position of Liz Truss: Even after a turnaround, premiership Truss can ‘have the shelf life of a head of lettuce’ Truss not ‘in power’ In a tweet , Liz Truss backs the decision to torpedo her own economic policies. “The British people rightly want stability,” she writes. And: “We have taken action to chart a new course for growth.” She avoids direct confrontation with critics for the time being. She herself refuses to come to the House of Commons to answer questions. Penny Mordaunt, leader of the Conservative party in the House of Commons, does so in her place. Now that the markets seem to calm down, Truss is certainly not out of the woods all of a sudden. This economic u-turn, three days after Hunt took office, gives the impression that he is more or less at the helm, not she. Labor leader Keir Starmer summarizes Truss’ position by stating that she is “ in office ”, but not “ in power ”. There is plenty of speculation in the British press about her departure. “The question is when, not if she will go,” an unnamed minister told the Financial Times . Another: “It’s over, but I don’t know exactly when. Maybe this week, maybe next.” In the meantime, a handful of lower house members are also calling for her to leave. Advantages for Truss are that there is no logical successor for her and that according to her party’s internal rules it is difficult to oust a prime minister who has been in office for less than a year. At the same time, few people seem to assume that they are completely perfect that year. If she doesn’t make it to early 2023, she’ll be the shortest-serving British Prime Minister ever. That record is still held by George Canning , who led the country for about four months in 1827. His premiership ended when he died of pneumonia.
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