Britain’s new finance minister is expected to announce an about-face before Parliament today.
(Photo: AP)
London Britain’s new finance secretary, Jeremy Hunt, announced far-reaching changes to the government’s controversial budget plans on Monday. He informed the public at noon, and a statement in the British House of Commons is to follow in the afternoon.
Corporate income tax for companies is not to be reduced from 25 to 19 percent, and the planned reduction in income tax from 20 to 19 percent has also been cancelled. You can not finance these tax cuts with new debt. A number of other tax cuts will also not be introduced, Hunt said.
Abandoning these plans will save the British Treasury costs of around £32 billion a year. An energy price cap is to apply without restrictions until April 2023, but will then be adjusted and no longer be universally applicable. Details have yet to be worked out, says Hunt.
The Finance Minister also emphasized the urgency of his announcements by saying that they were relevant to the financial markets. “No government can control markets, but governments can create more stability,” Hunt said.
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With the announcement, the government of Prime Minister Liz Truss is withdrawing most of the tax breaks presented by Hunt’s predecessor, Kwasi Kwarteng, at the end of September.
Truss could be toppled
After the announcement of the tax breaks, the financial markets reacted violently without a counter-financing plan. The pound plummeted against the US dollar.
The Bank of England had to intervene several times and buy government bonds. Rising interest rates on home loans exacerbated the cost of living crisis for many homeowners.
Truss had already fired her Finance Minister Kwasi Kwarteng last Friday and announced a partial U-turn in a remarkable press conference. The fact that Hunt is now doing it again is a sign that the government considers the situation to be extremely serious.
But if you believe the British media, Truss can hardly be held as head of government anyway. Accordingly, her fall is already being prepared in the conservative governing party.
Longtime Conservative MP Roger Gale told the BBC Hunt is now de facto Prime Minister. According to the Daily Mail, Truss may face a no-confidence vote later this week. More than 100 MPs from the ruling Conservative Party are ready to overthrow her.
More: She is still prime minister, but Liz Truss lost power long ago