Can Jeremy Hunt’s mini-budget reversal save Truss?

Markets respond favourably but some pundits say newly announced U-turn may make PM’s position even worse

Jeremy Hunt
Chancellor Jeremy Hunt has outlined the government’s medium-term fiscal plan two weeks ahead of schedule
(Image credit: (Chris J Ratcliffe/Getty Images))

Jeremy Hunt has announced the reversal of “almost all” of the tax measures proposed in the growth plan put forward by Liz Truss and his predecessor Kwasi Kwarteng only three weeks ago.

In a statement this morning, the new chancellor also said that Truss’s flagship energy cap price guarantee, which was due to last for two years, would now be reviewed in April. A Tory party insider described the energy and tax U-turns as “an utter humiliation of the prime minister”, according to the Financial Times’s Sebastian Payne.

Pundits had expected the reversal of the tax cuts, which triggered market turmoil, but the axing of Truss’s long-term spending commitment on energy was a “big surprise”, said The Guardian’s Andrew Sparrow. “There is nothing left of the Truss agenda at all.”

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What the papers said?

The pound “spiked” and “borrowing costs are falling further” following Hunt’s statement about the government’s medium-term fiscal plan, said The Telegraph.

The announcement was brought forward from 31 October amid growing calls from both outside and within the Tory party for Truss to quit. The aim will be “to appease markets and Tory MPs alike” following the “disastrous fallout” from Truss’s original plan, said Politico.

But “abandoning the existing energy price cap scheme from April leaves this government holed below the waterline”, argued Sky News’s political editor Sam Coates. As well as households now having to face energy bill rises from April, “just as millions face mortgage payments too”, the reversals also suggest that “Labour got it right when Truss got it wrong” by proposing universal rather than targeted support.

And if the bid to steady market nerves is successful, Hunt is likely to get all the credit, according to some analysts. Truss “is no longer leading”, wrote The Telegraph’s associate editor Christopher Hope. Instead, “she is being led”.

What next?

One of Truss’s “biggest political problems is that cabinet ministers and senior MPs are already leadership plotting and organising in private”, tweeted the FT’s Payne. “Much like the end of Boris Johnson, it’s very hard to put all that back in the bottle once it's out.”

Amid mounting speculation yesterday about Hunt’s announcement, Payne reported that “even at the most senior levels of government, there is a sense that the arrival of a new chancellor has not saved the prime minister”.

But a “senior” Conservative ally of the PM told The Sun that “it is time the plotters thought about who they work for, it is the British people”.

“Those wanting a People’s Vote-style rerun of the summer contest will simply bring about an early general election,” the unnamed insider reportedly warned.

Like Truss and the Tories, the markets are also facing an uncertain future. Bloomberg economist Jamie Rush said that “Hunt has taken meaningful steps toward restoring fiscal sustainability”.

“But there’s a huge amount still to do to convince markets the UK is on the right path,” Rush continued. “His next challenge will be to identify spending cuts that are actually deliverable – that will be hard to do.”

Benjamin Nabarro of US bank Citi told The Times that the UK still had a “chronic credibility issue” that “doesn’t look set to be addressed anytime soon”.

Some believe that the damage to the credibility of both Truss and the country from last month’s mini-budget could be irreversible. “When I saw that 6am emergency statement from the Treasury, I had a flashback to my frenetic time reporting on the financial collapse of Greece during the global financial crisis 14 years ago,” tweeted ITV’s Political editor Robert Peston.

“The UK is still a long way from being in the kind of hole that Greece was in. But I genuinely never thought I’d see this kind of rolling series of tax and spending u-turns by any British government, a crisis caused exclusively by the ill-judgement of that same government.”

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Jamie Timson is the UK news editor, curating The Week UK's daily morning newsletter and setting the agenda for the day's news output. He was first a member of the team from 2015 to 2019, progressing from intern to senior staff writer, and then rejoined in September 2022. As a founding panellist on “The Week Unwrapped” podcast, he has discussed politics, foreign affairs and conspiracy theories, sometimes separately, sometimes all at once. In between working at The Week, Jamie was a senior press officer at the Department for Transport, with a penchant for crisis communications, working on Brexit, the response to Covid-19 and HS2, among others.