UK finance minister Jeremy Hunt vows to win back financial market trust
After effectively dismantling Truss’s gamble that tax cuts would spur economic 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 will set out details in a fiscal statement on Oct 31.
The Sunday Times said initial forecasts from the Office for Budget Responsibility showed a 72 billion pound (US$80 billion) shortfall in the current plans. The paper also said Hunt would delay a planned cut to the basic rate of income tax.
The Treasury declined to comment on the report.
Asked if markets would have confidence in his plans, Hunt told the BBC: “Well, I think, you know, for people trading the markets, actions speak louder than words.”
A first test will come on Monday morning when trading in Britain’s battered government bonds resumes without the support of the Bank of England’s emergency bond-buying programme, which expired on Friday.
“Basically we’ve moved from looking not too dissimilar from the US or Germany as a proposition to lend, to looking more like Italy and Greece,” former Bank of England Deputy Governor Charlie Bean told Sky.
“THE PM IS IN CHARGE”
While Hunt seeks to fend off financial market pressure, Truss has to deal with mutiny from within her party.
Reports citing anonymous sources filled Sunday’s newspapers, with defence minister Ben Wallace touted as senior lawmakers’ preferred replacement by the Sunday Mirror, and Rishi Sunak – who Truss defeated last month in a leadership contest that balloted Conservative Party members – named as another possible successor by the Sun on Sunday.
Writing in the Sun, Truss admitted her plans had gone “further and faster than the markets were expecting”.
“I’ve listened, I get it,” she wrote. “We cannot pave the way to a low-tax, high-growth economy without maintaining the confidence of the markets in our commitment to sound money.”
Conservative lawmaker Robert Halfon said her initial plans had made the government look like “libertarian jihadists” who had treated the whole country as laboratory mice on which to carry out ultra-free-market experiments.
He told Sky that while he was not calling for her resignation now, things had to improve.
Hunt was asked whether, given the drastic policy change he has overseen, he was now effectively running the government.
“The prime minister is in charge,” he said. “She has changed the way we’re going to get there. She hasn’t changed the destination, which is to get the country growing.”