Jeremy Hunt used his first day as U.K. Finance Minister to announce that almost all of the controversial tax measures would be reversed.
The U-turn includes scrapping the cut in the lowest rate of income tax from 20% to 19%, as well as cuts to dividend tax rates, the reversal of off-payroll working reforms, and the freeze on alcohol duty rates.
According to Hunt, the tax cuts were worth over 30 billion dollars annually.
The cancellation of the planned rise in National Insurance, a general taxation, and a cut in taxes on property purchases are the only fiscal policies of the previous Finance Minister.
By 11:30 a.m., the pound was up over 1% against the dollar. Time in London. The 10-year yield on the U.K. government bonds fell sharply. Prices affect yields.
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The energy package designed to subsidise consumer and business energy bills would only run until April and then be reviewed in order to cost the taxpayer less.
The government is capping the amount paid per kilowatt hour for gas and electricity at a lower rate than the market rate due to high wholesale prices. The average household is expected to pay £2,500 per year, still higher than the previous year's average bill, but lower than the previous year's prediction.
Hunt said in a statement that a central responsibility for any government is to do what is needed for economic stability.
Government can't control markets, but it can give certainty about the finances. There are many factors that affect markets. Although the prime minister and I are both committed to cutting corporation tax, she listened to concerns about the mini budget.
Hunt said a full statement with questions would come in parliament later Monday, but because the details were market sensitive he wanted to give a short summary.
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Line chart with 902 data points.The chart has 1 X axis displaying Time. Range: 2022-10-16 07:34:00 to 2022-10-17 07:34:00.The chart has 1 Y axis displaying values. Range: 1.115 to 1.135.End of interactive chart.The top rate of income tax was scrapped and a planned rise in corporation tax was dropped.
The finance minister was fired less than six weeks after the budget was announced by the prime minister.
It included unfunded tax cuts that were billed as a radical plan to boost the U.K.'s sluggish economic growth and were a key part of Truss's leadership campaign.
Markets were spooked by a number of factors, including the prospect of significantly higher government debt given the impending subsidies of consumer and business energy bills, and the perceived mismatch between the Bank of England's current monetary tightening and the government's stimulus package. Markets were hurt by the lack of economic forecast from the U.K. Office for Budget Responsibility.
The pound fell against the dollar and U.K. government bonds lost value. The Bank of England launched a temporary bond-buying program in order to protect LDI funds from collapsing.
The public has been impacted by market volatility as mortgage offers were pulled and mortgage rates spiked, along with the potential effects of a weaker pound.
The Conservative Party will be hoping that the arrival of Hunt, who has held previous roles as health and foreign secretary but was a so-called "backbench" member of parliament until Friday, will give the government a much needed boost in support.
According to John Gieve, a former deputy governor at the Bank of England, the UK's deficit was close to £70 billion.
Even ifHunt squeezed public expenditure hard he wouldn't be able to square the books doing that.
He can't afford the kind of tax cuts that remain on the table.
It has been 40 days since she took the job, and media reports show discontent with her. A new leadership election can't be held for a year.
Boris Johnson will step down as Prime Minister on July 7.
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