LONDON — Britain’s new finance minister, Jeremy Hunt, on Monday reversed virtually all of the government’s planned tax cuts and wiped out Prime Minister Liz Truss’ free market economic plan to stabilize financial markets and He said desperate efforts would be made to stabilize her. government.
Hunt also announced that the government would end large-scale state interventions to limit energy prices next April and replace them with a yet-to-be-defined program that it said would promote energy efficiency, but that would not be the case for gas. This could increase uncertainty for households facing rising bills and electricity bills.
Truss’ Conservative government was due to release tax and spending details of its fiscal plan on Oct. 31, but with markets still reeling, Hunt pushed ahead. His announcement marked him one of the most dramatic reversals in modern British political history.
“The central duty of any government is to do what is necessary for economic stability,” Hunt said in a televised statement. “No government can control the market, but any government can provide certainty about fiscal sustainability.”
Among the new details, Mr. Hunt said the government is shelving a cut to the basic income tax rate. It is the centerpiece of a tax cut plan that Mr Truss has promised to reignite economic growth in the UK. She previously announced that she would abolish tax cuts for high-income earners and move forward with a planned increase in corporate taxes.
With the pound and British bonds rising in the run-up to the announcement, the news suggested the news could give Truss a few days of respite.
Hunt’s hastily scheduled announcement comes three days after Truss ousted his predecessor, Kwasi Kwarten, and withdrew another big tax cut. As Mr Hunt seeks to seize economic clout in the government, Conservative MPs are meeting to plan how to oust Mr Truss from power.
The mechanism for removing Truss remained unclear, and lawmakers knew how to find consensus to replace her to avoid an all-out and divisive leadership contest. Analysts said her position seemed untenable given the turmoil of the past three weeks.
Mr Hunt’s statement made clear that a relentless market, recalcitrant Conservative MPs and the loss of much of the public’s support are forcing the government to make a humiliating 180-degree turn in economic policy. .
Truss ruled out any new taxes last summer, but the government now plans to roll back tax cuts for ordinary and high-income earners and impose higher taxes on businesses. Just last week, the prime minister denied cutting public spending, but Mr Hunt said the government would consider painful cuts in a range of public services.
The government’s goal is to restore the UK’s confidence in the market by laying out plans to close an estimated £72bn ($81.2bn) budget gap. And Hunt’s measures are part of the journey to make that happen.