As Hunt named Chancellor...
Truss admits ‘this is difficult’ at press grilling
Liz Truss today confirmed another u-turn on tax but said she was “absolutely determined to see through what I have promised”.
The Prime Minister admitted that achieving her plans is “difficult” and that “parts of our mini-budget went further and faster than the markets expected”.
In a brief media conference in Downing Street, she insisted her actions would deliver stability and growth.
She named former Health Secretary Jeremy Hunt the UK government’s fourth Chancellor of the Exchequer this year after sacking her long-time ally Kwasi Kwarteng.
Mr Kwarteng took the blame for the badly-received mini-budget on 23 September which sent the financial markets into a tailspin and saw the Tories plunge in the opinion polls.
Ms Truss confirmed that she has scrapped the plan to halt the rise in corporation tax from 19% to 25%. It will now go ahead next year as announced by former Chancellor Rishi Sunak.
This will slice £18 billion off Mr Kwarteng’s proposed £43bn of tax cuts and follows the u-turn on cutting the top rate of income tax which saved £2bn.
However, it has been noted that Mr Hunt wanted to cut corporation tax by an even greater amount – to 15% – and will now defend the 25% rate.
In a day of revolving doors, Chris Philp has left his post as Chief Secretary to the Treasury and will take a new role at the Cabinet Office. Edward Argar replaces him at the Treasury.
There were few signs that the Prime Minister’s u-turn had instilled confidence in the markets.
After soaring 126 points earlier in the session, the FTSE 100 suffered a sharp sell-off in later trading to close just 8.52 points higher at 6,858.79.
The pound weakened against the dollar, falling 1.2% to $1.12 and fell by a similar proportion against the euro to trade at €1.15.
The announcement came as Conservative MPs have given Ms Truss 17 days to save her job, with claims that leadership rivals Rishi Sunak and Penny Mordaunt are being lined up to replace her should she falter further.
Under the rules of the 1922 Committee, the Prime Minister cannot face a confidence vote until she has been in office for a year. However, in practice, if enough MPs pressure Sir Graham Brady, the committee chairman, one would probably take place.
Mr Kwarteng cut short his trip to Washington yesterday to head home for talks with Prime Minister Liz Truss which resulted in her asking him to step down.
Mr Kwarteng confirmed his departure in a letter to the Prime Minister in which he spoke of the importance of maintaining fiscal discipline. He wrote: “I look forward to supporting you and my successor to achieve that from the backbenches.”
The Bank is due to end its emergency bond-buying scheme at the close of market business today, with speculation it may be forced to resume the programme if markets remain volatile. Comment