British Finance Minister Jeremy Hunt issues a warning about impending tax increases as he backs away from Prime Minister Truss’s ambitious economic reform plan.
LONDON: On Saturday, Britain’s new finance minister, Jeremy Hunt, warned of impending tax increases as he abruptly changed his position on right-wing Prime Minister Liz Truss’s radical economic reform plan.
Senior Conservative lawmakers allegedly plotted to remove Truss from office, potentially within days, outraged by the party’s decline in polls since she took over for Boris Johnson on September 6.
Injured Prime Minister
The Sunday Times ran with the title, “Hunt assumes full charge as plotters circle injured PM,” while The Observer ran with the headline, “Tories in discussions to replace Truss.”
Following Truss’s decision to fire Kwasi Kwarteng as chancellor of the exchequer, The Times and Telegraph claimed that Hunt was considering delaying a basic income tax cut in order to humiliate her once again.
Hunt and Truss were schedule to work out a new budget plan at crisis talks on Sunday at the prime minister’s country retreat. The new budget plan is expect to present on October 31 little over a month after Kwarteng’s failed effort to push through a number of unfunded tax cuts.
Hunt, who one ally referred to as the government’s new “chief executive” and who replaced Truss as the back-seat chairperson, admitted that “there were mistakes.”
Hunt claimed that Kwarteng and Truss erred on September 23 by attempting to lower taxes for the wealthiest Americans and by attempting to “fly blind” by releasing their proposal without the support of the Office for Budget Responsibility’s independent estimates.
That’s why I’m here, the prime minister has acknowledged that, Hunt said.
The new chancellor called to Bank of England governor Andrew Bailey, who has had to perform expensive interventions to calm feverish bond markets, as one of his first official acts after taking office on Friday.
Issue of stability
“I can tell you there is a very obvious and quick meeting of minds on the issue of stability and (economic) sustainability,” Bailey told reporters in Washington on Saturday.
US Vice President Joe Biden stated on Saturday that the tax reduction proposal that abandon was a “mistake”.
I don’t agree with the strategy, but Great Britain should decide that, not me, he said.”I think that the concept of slashing taxes on the super-wealthy at a time when…
The main focus of the disastrous budget presented by Kwarteng and Truss was tax reduction.
However, they paid for by billions in additional borrowing, which sent financial markets into a tailspin over the possibility of rising inflation and put British people in the grip of a cost-of-living crisis.
“Holding on”
Hunt warned that “all government departments,” including welfare, health, and defense, risk expenditure curbs: “We will have some very difficult decisions ahead.”
“Additionally, not all taxes reduce as quickly as some would want. Several taxes will go up.”
On November 3, the Bank of England will convene its following rate-setting meeting shortly after Hunt’s impending budget statement.
In a separate address on Saturday, Bailey issued a further warning that the central bank will “not hesitate” to increase rates in order to rein in the inflationary crisis. He also said that a “stronger reaction” than anticipate may be necessary.
Hours after Kwarteng returned early from international finance talks in Washington, Truss fired him. She then pulled another U-turn by agreeing to a hefty increase in the profits tax assessed on businesses.
The prime minister barely answered four questions in the ensuing Downing Street press conference, anxiously scanning the audience while giving succinct responses, before leaving abruptly after little over eight minutes.
Jenni Russell, a Times writer, described Liz Truss as “robotic, hesitant, tone-deaf, stubborn and still totally sure of the purity and need of her goal, killing off her political career in a matter of minutes.”
Pound and bond markets
When asked why she should not step down, Truss said that she was “absolutely committed to see through what I have pledge.” However, her words did little except further weaken the pound and bond markets.
As the Sunday tabloids detailed savage infighting among party factions, former Conservative leader William Hague declared that Truss’s leadership now “hangs on a thread.”
According to the Sunday Times, up to 100 letters of disapproval for Truss have sent by Conservative MPs. Her dethroned challenger for the leadership, Rishi Sunak, and another former nemesis, Penny Mordaunt, are thought to be her main opponents.
Prime minister to the wolves
Robert Buckland, the Welsh secretary, urged his disgruntled colleagues not to “throw another prime minister to the wolves” as the opposition Labor paTruss was charged for “clinging on” Labor leader Keir Starmer, who also called for an early general election.
He tweeted, “The Tories no longer have a mandate from the British people,” after Truss was elect prime minister with the support of only 80,000 Conservative members, or less than 0.2% of the country’s voters.
