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 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.”
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
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.”
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Chas Newkey-Burden has been part of The Week Digital team for more than a decade and a journalist for 25 years, starting out on the irreverent football weekly 90 Minutes, before moving to lifestyle magazines Loaded and Attitude. He was a columnist for The Big Issue and landed a world exclusive with David Beckham that became the weekly magazine’s bestselling issue. He now writes regularly for The Guardian, The Telegraph, The Independent, Metro, FourFourTwo and the i new site. He is also the author of a number of non-fiction books.
-
The Pentagon faces an uncertain future with Trump
Talking Point The president-elect has nominated conservative commentator Pete Hegseth to lead the Defense Department
By Justin Klawans, The Week US Published
-
This is what you should know about State Department travel advisories and warnings
In Depth Stay safe on your international adventures
By Catherine Garcia, The Week US Published
-
'All Tyson-Paul promised was spectacle and, in the end, that's all we got'
Instant Opinion Opinion, comment and editorials of the day
By Justin Klawans, The Week US Published
-
Can Europe pick up the slack in Ukraine?
Today's Big Question Trump's election raises questions about what's next in the war
By Joel Mathis, The Week US Published
-
What does the G20 summit say about the new global order?
Today's Big Question Donald Trump's election ushers in era of 'transactional' geopolitics that threatens to undermine international consensus
By Elliott Goat, The Week UK Published
-
Will Trump fire Fed chair Jerome Powell?
Today's Big Question An 'unprecedented legal battle' could decide the economy's future
By Joel Mathis, The Week US Published
-
Will Donald Trump wreck the Brexit deal?
Today's Big Question President-elect's victory could help UK's reset with the EU, but a free-trade agreement with the US to dodge his threatened tariffs could hinder it
By Harriet Marsden, The Week UK Published
-
Where did Democratic voters go?
Voter turnout dropped sharply for Democrats in 2024
By Joel Mathis, The Week US Published
-
Can Ukraine win over Donald Trump?
Today's Big Question Officials in Kyiv remain optimistic they can secure continued support from the US under a Trump presidency
By Richard Windsor, The Week UK Published
-
Where does Elon Musk go from here?
TODAY'S BIG QUESTION After gambling big on Donald Trump's reelection bid, the world's wealthiest man is poised to become even more powerful — and controversial — than ever
By Rafi Schwartz, The Week US Published
-
How did Trump shift voters to the right and win?
Today's Big Question Latino voters led a national shift to the right
By Joel Mathis, The Week US Published