LONDON: Britain’s new finance minister Jeremy Hunt faces an early test of his attempt to stem the crisis of confidence in Prime Minister Liz Truss on Monday (Oct 17) when the bond market delivers its verdict on his weekend overhaul of her economic programme.
Truss fired her friend Kwasi Kwarteng and named Hunt as her new chancellor of the exchequer on Friday in the hope of recovering some economic policy credibility and staying in Downing Street, little more than month after she moved in.
But British bond prices immediately renewed their sharp sell-off in the final hours of trading last week as investors decided that Truss’s decision to allow a rise in tax on company profits – reversing her promise to freeze them – was not enough.
Hunt, a former foreign and health minister, said on Saturday some taxes will go up, spending will rise less than previously planned and that he hoped investors would take note of his changes that represented a near total U-turn in fiscal policy.
“No government can control the markets. No chancellor should seek to do that,” Hunt told BBC television in an interview broadcast on Sunday.
“There is one thing we can do and that’s what I’m going to do, which is to show the markets, the world, indeed people watching at home, that we can properly account for every penny of our tax and spending plans.”
The Sunday Times reported Hunt would delay by a year a cut to income tax for workers which Truss had promised for April.
Trading in Britain’s battered government bonds resumes at 8am on Monday, the first day that trading in long-dated debt will not be supported by emergency Bank of England bond-buying which began on Sep 28 and expired on Friday.
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