Will chancellor bring ‘rabbit out of hat’ at mini-budget?

Kwasi Kwarteng is expected to flesh out government’s cost-of-living plans next week

Kwasi Kwarteng in Downing Street
The chancellor could bring forward the pledge to cut income tax by 1%
(Image credit: Rob Pinney/Getty Images)

Kwasi Kwarteng is expected to deliver an emergency mini-budget next Friday to deal with spiralling energy bills and the cost-of-living crisis.

The chancellor and his Treasury team have been putting the final touches to the budget, which will “bring in winter tax cuts for millions of people and set out more detail on energy support”, said The Guardian.

It is thought the government will confirm plans to reverse the recent rise in National Insurance contributions and outline further details of Prime Minister Liz Truss’s £100bn-plus emergency bailout to help households with energy bills.

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There is also speculation among senior MPs that Kwarteng will make a “rabbit out of the hat” announcement that could include bringing forward by a year the pledge, made by Rishi Sunak as chancellor, to cut income tax by 1% from 2024.

However, businesses have expressed anger in recent days about the “lack of clarity over the equivalent support for companies, which are also struggling with rising bills”, said Sky News.

There is also concern that Kwarteng’s announcement will be declared a “fiscal event”, said The Mirror. Unlike a budget, there is no requirement for the Office for Budget Responsibility to produce forecasts of how the plans will affect public spending and borrowing.

“That’s important because Ms Truss is thought to be planning a borrowing bonanza – as much as £100bn or £150bn – to fund her plan to cap average energy bills at £2,500 a year for two years,” said the paper.

Kwarteng is also expected to say that the government is repealing the existing EU-imposed cap on how much bankers can be paid in bonuses on top of their regular salaries, as part of a “radical overhaul of the UK’s regulatory regime”, said the i news site.

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