Newly appointed finance minister Jeremy Hunt’s stunning reversal means the Conservative government’s economic package is now dead in the water just a few weeks after it was announced.
Jeremy Hunt faces another test on October 31, when he delivers a full fiscal statement.of September 23, Mr Hunt axed changes to income tax, dividend tax, alcohol duties and duty-free rules.
Mr Hunt flagged that he would still deliver a fiscal statement on October 31, which would include cuts to public spending. The bond market reacted to Mr Hunt’s announcement by pushing the 10-year gilt yield down below 4 per cent, a steep drop of 36 percentage points in a single morning. The pound climbed above $US1.13, its healthiest level since near the start of October.
Paul Johnson, director of the Institute for Fiscal Studies, said Mr Hunt had made a good start on plugging the hole in Britain’s public finances.“Fiscal credibility is hard won but easily lost. Today’s announcements won’t be enough, by themselves, to plug the gap in the government’s fiscal plans. Nor will they be enough to undo the damage caused by the debacle of the last few weeks. But they are big, welcome, clear steps in the right direction,” he said.
Mr Hunt will have added to his personal authority and credibility, but may not have bought much breathing space for the embattled Ms Truss.Her self-styled image as a Thatcher-esque disruptor and change-agent has been replaced by repeated references to “stability”. “There are so many schemes swirling around, but they all amount to one proposition: replacing the prime minister without an election,” said political strategist John McTernan.
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