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As UK’s Truss fights for jobs, new finance minister says she made mistakes

As UK's Truss fights for jobs, new finance minister says she made mistakes
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  • Truss fired the finance minister on Friday
  • New Chancellor Hunt Warns of Difficult Decisions
  • ‘I’ve heard it, I get it,’ says Truss
  • BoE’s Bailey says he agrees with Hunt on need to fix finances
  • Some Conservative lawmakers say Truss will be impeached

LONDON, Oct 15 (Reuters) – Britain’s new Chancellor of the Exchequer Jeremy Hunt said on Saturday some taxes would go up and tough spending decisions would be needed, saying Prime Minister Liz Truss had made mistakes while fighting to keep your job for a little over a month. finished.

In an attempt to calm financial markets that have been turbulent for three weeks, Truss fired Kwasi Kwarteng as his Chancellor of the Exchequer on Friday and scrapped parts of his controversial economic package.

With dire opinion poll ratings for both the ruling Conservative Party and the Prime Minister personally, and many of her own lawmakers asking, not if, but what Truss should look like. remoteTruss trusts Hunt to help save his premiership less than 40 days after taking office.

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In an article for The Sun newspaper published on Saturday night, Truss admitted that the plans had gone “further and faster than the markets expected”.

“I heard, I understand,” he wrote. “We cannot pave the way to a high-growth, low-tax economy without maintaining the markets’ confidence in our commitment to sound currency.”

She said Hunt would present the plan to reduce the national debt “in the medium term” at the end of the month.

But speculation about her future shows no sign of abating, with Sunday papers littered with stories that allies of Rishi Sunak, another former finance minister whom she beat out to become leader last month, were plotting to force her out. in a few weeks.

On a tour of radio and television studios, Hunt made a forceful assessment of the situation facing the country, saying that Truss and Kwarteng had made mistakes and that further changes to their plans were possible.

“We will have some very difficult decisions ahead of us. What the people want, the markets want, the country needs now, is stability,” he said.

The Sunday Times said Hunt would break more of Truss’s original package by delaying a planned cut to the base income tax rate as part of a desperate attempt to balance the books.

According to the newspaper, Britain’s independent fiscal watchdog had said in a draft forecast that there could be a 72 billion pound ($80 billion) black hole in public finances by 2027/28, worse than what the economists had predicted.

Truss had won the leadership contest to replace Boris Johnson on a platform of big tax cuts to stimulate growth, which Kwarteng duly announced last month. But the absence of details on how the cuts would be financed caused the markets to collapse.

She has already abandoned plans to cut taxes for high earners and said she would raise a corporate tax, abandoning her proposal to keep it at current levels. but a drop in bond prices after his news conference on Friday, he still suggested he hadn’t gone far enough.

‘MEETING OF MINDS’

Kwarteng September The January 23 fiscal declaration sparked a backlash in financial markets that was so fierce that the Bank of England (BoE) had to step in to prevent pension funds from being caught up in chaos as interest rates rose. loan costs.

BoE Governor Andrew Bailey said he had spoken with Hunt and they agreed on the need to repair public finances.

“There was a very clear and immediate agreement between us on the importance of fiscal sustainability and the importance of taking steps to achieve it,” Bailey said in Washington on Saturday. “Of course, an important measure was taken yesterday.”

He also warned that inflationary pressures could require a Highest interest rate increase than previously thought due to the government’s huge energy subsidies for homes and businesses, and its tax cut plans.

Hunt is due to announce the government’s medium-term budget plans on October 1. On January 31, in what will be a key test of his ability to show that he can restore credibility to his economic policy.

He warned that spending would not increase as much as people would like and that all government departments would have to find more efficiencies than they were planning for.

“Some taxes won’t go down as fast as people want, and some taxes will go up. So it will be difficult,” she said. He met with Treasury officials on Saturday and will hold talks with Truss on Sunday to discuss plans.

‘MADE MISTAKES’

Hunt, an experienced minister seen by many in his party as a safe pair of hands, said he agreed with Truss’s fundamental strategy of boosting economic growth, but added that his approach had not worked.

“Some mistakes have been made in the last few weeks. That’s why I’m sitting here. It was a mistake to lower the top tax rate at a time when we’re asking everyone to make sacrifices,” he said.

It was also a mistake, Hunt said, to “fly blind” and produce the fiscal plans without allowing the independent fiscal watchdog, the Office of Budget Responsibility, to verify the figures.

The fact that Hunt is Britain’s fourth finance minister in four months is testament to a political crisis that has gripped Britain since Johnson was ousted following a series of scandals.

Hunt said Truss should be judged in an election and on her performance over the next 18 months, not the last 18 days.

However, she may not get that chance. During the leadership contest, Truss won the support of less than a third of Conservative lawmakers and has appointed his backers since he took office, alienating those who supported his rivals.

The appointment of Hunt, who ran for leader himself and later endorsed Sunak, has been seen as a sign that she was reaching out, but the move did little to appease some of her party’s critics.

“It’s over for her,” a Conservative lawmaker told Reuters after Friday’s events.

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Reporting by Michael Holden, Alistair Smout, and William Schomberg Editing by Emelia Sithole-Matarise, Helen Popper, Ros Russell, and Diane Craft

Our standards: The Thomson Reuters Trust Principles.

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