As Liz Truss fights to keep her job less than a month into her term, the incoming UK Chancellor of the Exchequer, Jeremy Hunt, stated on Saturday that certain taxes would increase and harsh spending decisions would be required.
Truss removed Kwasi Kwarteng from her position as chancellor of the exchequer on Friday in an effort to calm the financial markets, which have been in turmoil for three weeks. She also threw out some of their contentious economic plans.
Less than 40 days after taking office, she has turned to Hunt to help save her premiership due to the poor ratings the ruling Conservative Party and the prime minister personally are receiving in the polls, as well as the fact that many of her own lawmakers are asking how rather than if Truss should be removed.
Hunt bluntly assessed the predicament the nation was in while touring TV and radio studios, saying Truss and Kwarteng had made mistakes. He said, “We will have some very difficult decisions ahead.”
“The thing that people want, the markets want, the country needs now, is stability,” Hunt said. “No chancellor can control the markets. But what I can do is show that we can pay for our tax and spending plans and that is going to need some very difficult decisions on both spending and tax.”
Truss won the leadership election to succeed Boris Johnson on a pledge of large tax cuts to spur growth, which Kwarteng confirmed last month. However, the lack of clarity on how the cuts would be funded threw the markets into a tailspin.
She has now abandoned promises to lower taxes for top incomes and stated that a company charge would increase, despite her intention to preserve it at current levels. However, it is unclear whether this has gone far enough to please investors.
Hunt is scheduled to present the government’s medium-term budget plans on Oct. 31, in what will be a critical test of the government’s ability to demonstrate its capacity to restore economic policy credibility. He stated that additional revisions to Truss’ plans were possible.
“Giving certainty over public finances, how we’re going to pay for every penny that we get through the tax and spending decisions we make, those are very, very important ways that I can give certainty and help create the stability,” he said.
He warned that expenditure would not rise as much as people wanted and that all government departments would have to find greater efficiency than they had planned.
“Some taxes will not be cut as quickly as people want, and some taxes will go up. So it’s going to be difficult.” He added that he would meet with Treasury officials on Saturday before meeting with Truss on Sunday to go over the preparations.
