UK: Truss decides to change economic course but is not rescued

UK: Truss decides to change economic course but is not rescued

Britain’s new Treasury Secretary Jeremy Hunt on Saturday pointed to the government’s “mistakes” and warned against making “very difficult decisions” in the face of the country’s crisis, a change of course that may not be enough to bail out the economy Liz Truss.

“Truss fights for survival,” headlined the Times on Saturday. “Truss clinging to power,” headlined the Conservative Daily Telegraph, as Tory MPs were still looking for a way to remove him from the executive branch.

For the Daily Mail, Friday saw “chaos, confusion and flip-flops reaching unprecedented extremes”.

Speaking publicly for the first time since his appointment on Friday, new Treasury Secretary Jeremy Hunt said bluntly on Saturday that Prime Minister Liz Truss and her sacked predecessor at the Treasury Department, Kwasi Kwarteng, had “made mistakes” the day before the economic crisis, which was turning into a political one crisis within the Conservative Party.

“The Prime Minister has recognized that and that’s why I’m here,” he added on Sky news channel.

– tax increases –

This close friend of Rishi Sunak, former Boris Johnson Treasury Secretary and opponent of Liz Truss in the Downing Street election campaign, is on a mission to take over the mini-budget announced on September 23 and badly received by the markets from the Conservative Party and the British people.

“This will require very difficult decisions,” warned Mr Hunt, who is preparing to abandon many of the prime minister’s campaign promises.

In particular, he announced that “spending won’t go up as much as people would like,” that “some taxes won’t go down as fast as people would like,” and that others “will go up,” noting in particular the new concession alluded announced Friday by Liz Truss.

The Prime Minister has had to abandon the 19% corporate tax rate and accept raising it to 25% as planned by the previous Conservative government. Two weeks ago, she had already had to forego a tax cut for the wealthiest households in view of the Bronca aroused by this measure.

Jeremy Hunt’s appointment should calm markets as much as it calms Tory rebellion.

One of his first actions as new minister was to meet Andrew Bailey, the governor of the Bank of England, who needed urgent action to calm markets after the mini-budget presentation.

Jeremy Hunt is now emerging as the government’s strongman, according to British media, as Prime Minister Liz Truss is severely weakened by his setbacks. And his press conference on Friday was not convincing.

After his speech, markets continued to punish sterling and the cost of Britain’s debt rose slightly on Friday, even as the Bank of England ended its emergency measures.

A sword of Damocles for many UK households facing mortgage repayments. Five million of them could have to pay back £5,100 more a year by the end of 2024 as interest rates rise, according to a study by think tank The Resolution Foundation published on Saturday.

– “chaos grotesque” –

For the Financial Times, Truss sacrificed Kwarteng “in a bet to save his head at Downing Street” but “the only thing that unites the (Conservative) party is a lack of confidence in Truss”.

On Friday, the PM dodged questions about her personal fate, hammering out that she remains “absolutely determined” to implement her policies.

“I feel betrayed, totally betrayed,” Conservative MP Christopher Chope told the BBC, condemning Liz Truss “in complete opposition to everything that supported her in her election”.

But in his camp we also raise the specter of a crushing defeat for those Conservatives tempted to provoke a general election while the Labor opposition is prancing at the top of the polls.

Union leader Keir Starmer on Saturday castigated the “grotesque chaos” caused by the Conservative government. “All the difficulties our country is facing today are its responsibility,” he stressed.


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