British finance minister coming out the back door

British finance minister coming out the back door

We need to act now to reassure the markets… We will weather this storm and deliver strong and sustainable growth to thrive.”

Liz Truss, Prime Minister of the United Kingdom.

Last Friday, UK Prime Minister Liz Truss sacked Kwasi Quarting, the chancellor, and tried to salvage her position by adjusting her controversial fiscal plan that plunged her into a political and economic storm.

“We have to act now to reassure the markets,” Truss told a news conference.

Kwarteng announced his dismissal early Friday in a letter to Truss and posted on his social media. However, the news was predicted when he unexpectedly returned to London while attending the International Monetary Fund (IMF) and World Bank (WB) meetings in Washington.

You have asked me to step down as your advisor. I accepted,” and thus begins the text. The former minister acknowledged that the economic environment had changed since presenting his growth plan on September 23 and affirmed the government’s commitment to fiscal discipline.

“A medium-term financial plan is essential to this end, and I look forward to your support and my successor in obtaining it from the banks,” Kwarteng wrote.

Truss replied simply: “As an old friend and colleague, I deeply regret your loss from the government. We share the same vision.”

Evolve into your plan, increase taxes

After announcing Kwarteng’s removal, Truss announced that the corporate tax would be increased to 25% and reversed the tax cut program.

In the plan unveiled in September, Kwarteng said the 19% corporate tax would be frozen and scrapped the 25% increase planned by his predecessor, Rishi Sunak, along with a series of unfunded tax cuts that rocked the markets.

Truss stressed that the tax increase would boost public finances by EGP 18,000 million annually. “We will do what is necessary to ensure that debt drops in the medium term,” he said at the press conference.

A £45 billion tax cut program aimed at boosting the economy has hit the pound, forcing the Bank of England to step in to stabilize markets, as well as a political backlash that has cost Truss and Quarting much criticism.

Jeremy Hunt is the new minister

Jeremy Hunt, a former Secretary of State, has been appointed as the new Treasury Secretary.

Hunt twice failed to run for leadership of the ruling Conservative Party, losing to former Prime Minister Boris Johnson and then disqualified in the first round of voting on Truss’ victory.

In his first comments to the press, Hunt promised to restore the markets’ confidence.

“No government can control the markets,” Hunt said in an interview with the BBC on 16 October. “There is one thing we can do: show the markets, the world, and people that we can calculate every penny of our tax and spending plans correctly.”

Asked if he thought the markets would trust his plans, Hunt replied, “I think for people who trade the markets, actions speak louder than words.”

Speaking to Sky News, he warned that he will make tough decisions.

“I want to be honest, we’re going to make tough decisions,” he declared, declaring that some taxes won’t be reduced as quickly as people want and others will increase. (with information from agencies)

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