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UK Chancellor of the Exchequer Hunt has pledged to restore confidence in financial markets

UK Chancellor of the Exchequer Hunt has pledged to restore confidence in financial markets
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  • PM Truss is under intense political pressure
  • The new Finmin says the government must account for every penny
  • Pledge to take “tough decisions” on spending, taxes

LONDON, Oct 16 (Reuters) – New finance minister Jeremy Hunt has vowed to restore Britain’s economic credibility by fully accounting for the government’s tax and spending plans, while his boss Liz Truss remains in charge of the country.

Prime Minister Truss appointed Hunt on Friday in an attempt to salvage his leadership as confidence in his ability to run the country eroded among both his own Conservative Party and the international financial markets.

Sunday newspapers were full of stories of plans to replace him.

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Investors have sold British government bonds heavily since September. 23 While Hunt’s predecessor, Kwasi Kwarteng, announced a string of unfunded tax cuts without releasing a set of independent economic forecasts.

The knock-on effects forced the Bank of England to intervene urgently to protect pension funds and raised mortgage costs – putting pressure on Britons’ finances.

“What I’m going to do … is make sure the markets, the world, actually people at home are watching that we get every penny of our tax and spending plan right,” Hunt said in an interview broadcast on BBC television. on sunday.

The first test for Hunt and Truss came on Monday morning when trading resumed in the battered bond market without support from the Bank of England’s bond-buying programme, which expired on Friday.

Britain’s economy is at risk of slipping into recession at the same time as the central bank raises interest rates to control rising inflation. Bank governor Andrew Bailey said on Saturday that he thinks so A big rate increase Will need early November.

Truss – who became leader of the Conservative Party just 41 days ago after promising tax cuts – fired Kwarteng on Friday and scrapped key parts of the program they agreed together.

The chaos has fueled discontent in the ruling party, which was split before Friday and fell far behind the opposition Labor Party in opinion polls.

Three Conservative lawmakers separately called for his resignation on Sunday.

“In recent weeks, I have seen the government undermine Britain’s economic credibility and irreparably fracture our party. Enough is enough,” lawmaker Jamie Wallis wrote on Twitter, publishing a letter calling for Truss to resign.

His fellow Conservative Crispin Blunt told Channel 4’s “The Andrew Neil Show” that “it’s game over” for Truss, and it’s now a question of how the succession is managed.

A lawmaker on the organization’s leadership contest committee said the rules, which shield Truss from a formal challenge for 12 months, could be changed if an “overwhelming majority” of conservative lawmakers wanted it.

“I don’t think we are anywhere near that at the present time,” Geoffrey Clifton-Brown, treasurer of the 1922 committee, told Sky News.

Even US President Joe Biden Criticized the Trust’s original economic plan as a mistake

hard decision

After effectively breaking Trump’s gamble that tax cuts would spur economic growth and pay for public spending, Hunt said he would go further, including imposing tighter spending controls and some tax increases.

“I would ask every government department to find more efficiency savings,” he said, adding that while he wanted to keep other tax cuts promised by the government, he was not ruling anything out in his drive to balance the books.

He will give details in a financial statement on October 31.

The Sunday Times said preliminary forecasts from the Office for Budget Responsibility showed a 72 billion pound ($80 billion) shortfall in current plans. The paper also said Hunt would delay a planned cut in the basic rate of income tax.

The Treasury declined to comment on the report.

Asked if markets would trust his plan, Hunt told the BBC: “Well, I think, you know, in trading the market, actions speak louder than words.”

Former Bank of England deputy governor Charlie Bean told Sky that the incidents had affected Britain’s credibility.

“Essentially we’ve gone from looking not too different from the US or Germany, as a lending proposition, to looking like Italy and Greece.”

‘Prime Minister is in charge’

As Hunt seeks to depress the financial markets, Truss faces a rebellion from within his own party.

Reports citing anonymous sources filled Sunday’s newspapers, with Defense Minister Ben Wallace claimed by the Sunday Mirror as the preferred replacement for senior lawmakers and Rishi Sunak – who lost a leadership contest last month voted on by Conservative Party members – named as another possible successor. done sunday sun

Writing in the Sun, Truss admitted his plans had gone “further and faster than the market expected”.

“I hear, I understand,” he wrote. “We cannot pave the way for a low-tax, high-growth economy without maintaining market confidence in our commitment to finance.”

Conservative lawmaker Robert Halfon said his initial plans made the government look like “libertarian jihadists” who used the entire country as laboratory rats on which to conduct ultra-free-market experiments.

He told Sky he was not calling for his resignation now, saying the situation had to improve.

Hunt was asked whether, given the drastic policy changes he has overseen, he is now effectively running the government.

He said that the Prime Minister is in charge. “He changed the way we got there. He didn’t change the destination, which is what the country needs to move forward.”

($1 = 0.8953 pounds)

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Reporting by William James and William Schomberg; Edited by Louise Havens, Alexandra Hudson and John Stonestreet

Our values: Thomson Reuters Trust Policy.

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