Britain’s new Chancellor of the Exchequer Jeremy Hunt leaves 10 Downing Street on October 14, 2022 (AFP/ISABEL INFANTES)
Apologizing for her “mistakes”, British Prime Minister Liz Truss said she was determined to stay in power, hours after abandoning her economic plan announced by her new finance minister.
Six weeks after Liz Truss arrived in Downing Street, her tenure deteriorated after humiliating changes to her campaign promises.
In a somber interview with the BBC on Monday evening, the government leader reiterated his “regret” for his “mistakes” and believed he wanted to go “too quickly”.
He vowed “I will remain in office to keep my commitments to the national interest” and estimated he would still be party leader for the next elections scheduled in two years, where the opposition is a heavy favorite.
“I acted quickly to correct these errors”, Liz sent Truss to her address of majority, where intrigues mounted behind the scenes and pushed her towards eviction.
Jeremy Hunt, his new finance minister hastily appointed on Friday after a market storm unleashed by his predecessor Kwasi Kwarteng’s “growth plan”, now takes the helm of government after weeks of market turmoil that threatened the country’s financial stability.
On Monday, he unveiled the main lines of the medium-term budget plan, which is due to be presented in full on October 31. The “extremely severe” results include future state spending cuts and tax increases, a wholesale rejection of Liz Truss’s initial plan, although Jeremy Hunt promised the government would prioritize “‘help for the most vulnerable'”.
– In a state of disintegration of power –
At the end of September Kwasi Kwarteng’s plans for massive tax cuts and a massive boost to energy tariffs were not fully accounted for and would have to be financed by borrowing, raising fears of slippage in the public accounts.
The pound fell to an all-time low and long-term government borrowing rates rose, undermining pension funds and raising borrowing rates for households and businesses in an already struggling UK economy.
The Bank of England had to intervene to prevent the situation from deteriorating into a financial crisis and the Monetary Fund called for a course correction.
Liz Truss sent the minister responsible for relations with parliament, Benny Mordant, to respond to opposition parties in parliament, fueling questions about her disintegrating powers.
British Prime Minister Liz Truss during a press conference in Downing Street, October 14, 2022 (POOL / Daniel Leal)
Mrs Truss later appeared at Westminster with the Chancellor of the Exchequer, but remained blankly silent as she faced protests that she had ‘disgraced’ a Prime Minister and could not continue in office.
With only 40 days in power, he risks becoming the shortest-serving Prime Minister across the Channel.
“This is a crisis created by the Conservatives in Downing Street, but ordinary people are paying the price,” lamented Rachel Reeves, Labour’s finance manager.
He asked why the government did not tax energy producers to fund budget support, and said he feared a return to “austerity season 2” after the severe cuts of the 2010s.
– to repair the damage –
Shell boss Ben van Beurten suggested ten days ago that governments should tax energy companies more when they make more profits amid the energy cost crisis.
The pound was up nearly 1.6% at $1.13 by 8:30pm GMT, signaling a relaxation in immediate markets. The 30-year bond yield was at 4.38%, down sharply from Friday but higher than before Liz Truss took office.
Banknotes bearing the image of Queen Elizabeth are seen in London on April 22, 2022 (AFP / Tolga Akmen)
Among Monday’s announcements, the “biggest cost,” a cap on energy bills for all households that will finally be in place until April, will no longer be in place for two years. Beyond that, the Treasury will consider a new “cheaper” approach while protecting “those most in need”.
A long list of tax cuts thus goes to the dustbin, adding to a drop in tax rates on the incomes of the wealthy already abandoned. On the other hand, corporate tax hikes will eventually take place.
Taken together, Hunt said the tax measures would “raise around £32 billion a year”.
The IFS think tank warns that the announcements “will not be enough to plug holes in the government’s budget plans” or “repair the damage done in the past few weeks”.
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