After he was appointed by Truss on Friday as the successor to the fired Kwasi Kwarteng, Hunt took power. The experienced minister soon showed that he totally disagreed with the package of tax cuts that would benefit the wealthier British in particular. This radical, speculative policy has caused major fluctuations in the financial markets in recent weeks, all the more because Truss and Kwarteng had not stated where the money had to come from.
Hunt is now radically changing tack. During Monday afternoon, the minister will present a draft budget in the House of Commons, but he has already released the highlights in the morning in order to calm the money markets. He announced that the 1 percent income tax cut will not come until 2024. Truss had previously been forced to maintain the corporate tax rate hike to 25 percent. The abolition of the highest tax rate will also not take place.
A surprise was Hunt’s announcement that after April there will be no more compensation for the increased energy bills. After these adjustments, which yield the equivalent of 35 billion pounds, there is almost nothing left of the offending mini-budget. Many more billions are needed to get the balance right and Hunt will come with more budget cuts. Following his announcement, as hoped, the pound rose and bond market yields fell. Over the weekend, the Governor of the Bank of England had already welcomed Hunt’s arrival.
Truss’ future
The major intervention naturally leads to the question of why Truss is still there. After all, virtually all the promises she made for the leadership of the party last summer during the election have now gone up in smoke. She has not been seen since a dramatic press conference on Friday and none of her ministers have been willing to put in a good word for her during the breakfast programs. Behind the scenes, the Conservatives are working hard on plans to get her out of 10 Downing Street.
It has now also become apparent that the dismissed Kwarteng had doubts about the abolition of the highest tax rate, but that Truss was determined to do so.