LONDON — Britain’s new finance minister warned on Saturday that “difficult decisions lie ahead” the morning after replacing his predecessor after just 38 days in office.
Jeremy Hunt told various British news outlets that the tax cuts promised by beleaguered Prime Minister Liz Truss were not as big as first thought and that government departments would have to cut their budgets. He said it would be gone.
Hunt told British broadcaster Sky News that “difficult decisions await”, adding: “Some taxes won’t come down as fast as people want, some will go up. ‘ said. (Sky News is owned by his Comcast, NBC News’ parent company.)
He added that “all government departments will have to find efficiencies beyond what they had planned”, endorsed by successive leaders of the ruling Conservative Party in the aftermath of the 2008 financial crisis. He hinted at a return to austerity, the fiscal policy.
Mr Hunt also echoed a statement from the UK Treasury Department that said it would develop the government’s medium-term financial plan on 31 October.
He has asked several other British broadcasters to follow suit in an attempt to distance himself from his predecessor Kwasi Kwarten, who was sacked on Friday after weeks of market panic fueled by an economic plan he unveiled last month. I sent you a message.
Kwarteng, as he is known as the UK’s Chancellor of the Exchequer, became the second shortest-serving Chancellor of the Exchequer.
Amid speculation that she could be sacked just weeks after taking office, Truss said at a news conference on Friday that she had changed course “to reassure our financial discipline markets.” rice field.
She was also trying to reassure members of the Conservative Party whose vote numbers were plummeting along with the value of the pound.
“The financial crisis the UK is currently facing could unfortunately have been avoided,” George Dibb, director of the Center for Economic Justice at the Public Policy Institute, a London think tank, told NBC News on Saturday.
Earlier this month, after repeatedly rejecting offers to change course, Truss scrapped an offer to cut taxes for those earning over £150,000 ($167,000) a year.
It failed to calm the market or lawmakers.
The plan called for £45bn ($50.4bn) of tax relief, which is more than the UK’s annual defense budget, but how it would be financed and what the consequences would be. It was not made clear if the service would need to be cut.
The proposal caused interest rates and mortgage payments to rise, the value of the pound to plummet, and government borrowing costs to skyrocket. Details were to be revealed in a speech on October 31, but the political and economic damage had already been done.
The Central Bank of England was forced to step in and buy billions of pounds of government bonds, known as gold coins, to calm the market. In doing so, the bank warned of “substantial risks” to the UK financial system as a whole.
On Tuesday, the bank said it had stepped in to stop the “bargain”. Importantly, the bank’s bond-buying program was due to end on Friday. That meant the government had to convince the market that the economic plan was sound enough to avoid further disruption.
The International Monetary Fund strongly criticized the unfunded tax cuts, but economists and commentators around the world questioned the wisdom of such a radical plan.
“Qwarteng’s dismissal and some U-turns on unfunded tax cuts may provide a bit of a breather, but the damage has already been done, not only to the economy, but to confidence in this government. seems to be,” said Dib. Added.
Dibb agreed with Hunt’s assessment that tax increases are likely necessary, but said, “After 10 years of austerity, there is no more cuts in the public sector.”
Rumors were already swirling that senior Conservative Party officials were plotting a way to remove the prime minister from power, and for Anand Menon, professor of European politics at King’s College London, “the problem is that Liz Truss will be out next week. It’s a matter of whether you can survive until
Britain’s last two prime ministers, Theresa May and Boris Johnson, have resigned after internal strife in the Conservative Party made them untenable. Mr Truss is his third prime minister in his six years in the UK.
Menon added that the government’s options are becoming increasingly limited and that if the market reacts poorly to Jeremy Hunt’s media appearances, the UK government will be forced to change course further.
