Following U-turns on two significant programmes, Truss is attempting to hold onto her position in tax while incoming chancellor Hunt creates a fresh budget proposal.
As she prepares to enter into crisis negotiations with her new finance minister and a tense week of scheming by Conservative opponents, British Prime Minister Liz Truss insists on her commitment to “sound” economics.
Truss stated in the Sun on Sunday newspaper that “we cannot pave the path to a low-tax, high-growth economy without keeping the trust of the markets in our commitment to sound money,” with even US President Joe Biden joining in the criticism of her economic policy.
Tax cuts
On September 23, former Chancellor Kwasi Kwarteng and Truss revealed a right-wing agenda of $50 billion in tax cuts, modeled by US President Ronald Reagan of the 1980s, that was funded entirely by increased debt.
Only a few weeks after Truss succeeded Boris Johnson, markets crashed in reaction, raising borrowing prices for millions of Britons.
The Conservatives’ poll ratings also plummeted, sparking open conflict inside the ruling party.
She dismissed Kwarteng on Friday even though she was a co-author of the package. In the midst of Britain’s cost-of-living crisis, his successor, Jeremy Hunt, is now rolling back the tax cuts while urging his cabinet colleagues to exercise fiscal prudence.
“The prime minister is in command”
As she battles for her political career, Truss is attempting to persuade the markets that she can produce results, according to Al Jazeera’s Andrew Simmons, reporting from London.
There is little doubt that the conservative administration is seeking for a new leader, but he questioned if a general election may result.
So, “That’s not what conservatives want.”
On Sunday, the new chancellor met with Truss at the prime minister’s rural hideaway to discuss a fresh budget proposal he will present on October 31.
In an interview with BBC television that aired on Sunday, Hunt stated, “I believe we have to be honest with people about it. It’s going to be very, very tough.”
He stood up for Truss following her backtracking and the catastrophic press conference she gave on Friday after firing Kwarteng.
Hunt stated: “The prime minister is in command. She’s been ready to do that most hardest thing in politics, which is to change tack.
Newspapers and a number of Conservative Party members contested that decision, claiming that Truss’s main framework for policy is now in ruins.
The Treasury declined to confirm rumors that Hunt intends to postpone a planned reduction in the basic income tax rate, eliminating another major announcement made by the new administration last month.
Letters of non-confidence
Conservative MPs have sent up to 100 letters indicating their lack of confidence in Truss.
Rishi Sunak, a former competitor of Truss for the leadership, and Penny Mordaunt are reportedly gaining support for a potential “unity ticket” to revive the Conservative Party.
According to the Sunday Mirror, Ben Wallace, the defense secretary, might be another compromise candidate for president.
According to Conservative MP Robert Halfon, who backed Sunak, “I worry that, over the past several weeks, the administration has… treated the entire country as a type of laboratory mice in which to carry out extreme, ultra free-market experiments.”
Naturally, he continued, “colleagues are upset with what is happening, with hemorrhaging in the opinion polls.” It is natural that coworkers will discuss the situation to see what may be done.
Initial response
Beginning with the initial responses on the bond and currency markets when trading begins on Monday and when her unruly members of parliament reassemble in Westminster, the upcoming week might be crucial for Truss.
Andrew Bailey, Governor of the Bank of England, who had to make expensive interventions to calm the bond markets up until Friday, has at least given Hunt significant support.
In preparation for the next rate-setting meeting of the central bank, which will take place on November 3, Bailey hailed a “quite clear and immediate meeting of minds” with the incoming chancellor.
Truss’ attempts to lower taxes on the “super-wealthy” were criticise by Biden, who intervened in an ally’s financial matters in a highly uncommon way.
The Democratic president claimed on Saturday that “I wasn’t the only one who thought that was a mistake.”
