Urgently seeking to calm financial markets in disarray, Britain’s new finance minister announced on Monday the cancellation of “nearly all financial measures” introduced by the British government three weeks ago. Les Trusswhose political survival is threatened.
Jeremy HuntAppointed last Friday immediately after the dismissal of the ultra-liberal party Quasi Quarting – who have been in office for just over a month – made the announcement in a televised message, before giving explanations this afternoon in the House of Commons in London.
Although this goes against parliamentary rules, he made it clear that he had been given permission by the chamber to “reduce useless speculation” about “market sensitive decisions” for which it is necessary to “provide confidence and stability”.
British financial markets have experienced stress and volatility since Truss and Quarting introduced a controversial economic package on September 23.
This combined significant public assistance for energy bills and aggressive tax cuts, but included nothing to finance it other than to increase Britain’s already huge public debt.
Taking a dramatic 180-degree turn and weakening Truss, who is still prime minister but no longer has any real power, Hunt declared: “We will reverse nearly all the fiscal measures announced…three years ago.”
Among its key decisions, is to help families face the cost energy bills You’ll be limited to six months, until April, instead of the two years that Truss and Quarting promised.
After going ahead with these changes, Hunt will present, as initially planned, his full budget plan on October 31, along with a UK economic outlook prepared by the OBR public body.
gears, on a tightrope
Truss, everyone wondering about, held a disastrous press conference on Friday to announce her decision to change her finance minister and adjust her controversial fiscal procedures. She appeared nervous in front of the press, dodged questions about her resignation and left after 8 minutes.
After this new blow to her credibility, the prime minister must meet Monday afternoon with her Conservative Party MPs to try to persuade them to keep her in office.
According to the British press, several Conservative MPs have been considering names to replace her for days. The Times on Monday listed the names of her Downing Street replacements.
Truss is the UK’s fourth Conservative prime minister since the Brexit referendum in 2016, but several figures on the British right have said publicly that he should resign, after just 40 days in office.
Truss and Quarting’s economic plan, unveiled on September 23, has left financial markets in disarray, fearing a derailment for Britain’s public finances.
The pound fell and the cost of public debt rose, making interest on loans to families and businesses more expensive.
The Bank of England was forced to intervene to prevent the situation from turning into a financial crisis, with its massive long-term debt purchase program ending on Friday.
In a sign that Hunt’s comments to ensure the stability of British public finances may reassure the markets, even before his televised message, the pound rose 1.08% against the dollar on Monday, trading at $1.1293 by 09:20 GMT.
For their part, the interest rates of public debt in 30 years decreased to 4.48%, which also reflects a positive response from investors.
This reaction “suggests that the dismissal of Kwasi Kwarteng and the appointment of Jeremy Hunt have helped stabilize the market and restore confidence in the UK government bond market,” said Victoria Scholar, an analyst at Interactive Investors.
Hunt offered over the weekend that he would have to take “drastic” action, with tax increases and spending cuts in all ministries, a radical change from Truss’ programme, a proponent of a liberal ultra-low tax policy to encourage “economic growth”.