Tabula Rasa. This is how the discourse of the new can be summed up Chancellor of the Exchequer Jeremy Hunt, who as expected in his first public speech announced the deletion of almost all measurements announced last September 23 as part of the 45 billion mini-tax reform that triggered the perfect storm on the markets, forcing Prime Minister Liz Truss to back down, but also to oust the now former finance minister, Kwasi Kwarteng, to try to save itself. Second the Guardian, with the changes announced today”there is nothing left of the Truss agenda”.
Hunt on Truss' tax package: 'We'll cancel almost everything'
"We will cancel almost all tax measures announced in the growth plan three weeks ago”, said Hunt bluntly, canceling with a swipe the entire fiscal package which, in the intentions of his predecessor, should have been entirely financed by resorting to public debt.
This therefore means that not only will taxes for the wealthiest not be cut (the measure had already been withdrawn in recent weeks), but also that thecorporate tax rate will rise from 19 to 25% and that that based on personal income will remain stable at 20% (a reduction to 19% was foreseen in the package).
The innovations announced today, by the new minister's own admission, aim at “giving certainty” to the markets on the sustainability and soundness of UK public finances after the turmoil that brought sterling and pension funds to their knees and caused government bond rates to rise, forcing the Bank of England to implement emergency purchases for over 65 billions of pounds.
Bills: aid against expensive energy reduced
Hunt also announced changes in aid against high energy costs. Expected a fort reduction of support measures to families and businesses against high bills. In detail, the cap on bills energy burden on families will last only six months, i.e. until April, and not until 2024 as envisaged in the fiscal package signed by Truss and Kwarteng. However, the £13 billion contribution cut to National Insurance and the £1,5 billion stamp duty cut remain in force.
“The single largest expense in the growth plan had been the guarantee of the energy price. This is a vital measure to support millions of people through a difficult winter. Today I want to confirm that the support we are providing between now and April next year will not change. But beyond this time limit, the Prime Minister and I have agreed that it would not be responsible to continue to expose public finances to unlimited volatility in international gas prices,” Hunt said.
However, the Finance Minister tried to reassure citizens: “the Treasury will conduct a review on how support energy bills beyond APR of next year. The goal is to design a new approach that will cost the taxpayer significantly less than anticipated while ensuring sufficient support to those in need. Any support to businesses will be targeted at those in the greatest difficulty and the new approach will better incentivize energy efficiency”.
The market reaction: pound up
The new fiscal policy announced today by the new chancellor Jeremy Hunt has immediately pushed up the GBP which in mid-afternoon fluctuates around the threshold of 1,13 per dollar against 1,1279 this morning. Down sharply i returns government bonds: the 29-year gilt rate fell by 4,2 basis points to XNUMX%. Also running London's Ftse 100 which joins the positive trend of the continental lists, gaining over 1%.
