What is Jeremy Hunt’s next statement? inancial event explained
Liz Truss and Kwasi Quarting have rattled markets with their small budget, with new advisor Jeremy Hunt now hoping to ease market fears with another financial event.
Announced after the pound plunged to a record low against the dollar before being introduced amid political pressure at the Conservative Party conference, Kwasi Kwarting had hoped to present a “medium-term fiscal plan” before his dismissal. The aim of the event was to convince the markets that the government would pursue massive tax cuts with “fiscal discipline”.
Despite Quarting’s ouster onriday (October 14), the event is still slated to take place – something Jeremy Hunt has since confirmed. So, if the Liz Truss administration survives, when will Hunt announce this plan? Here’s everything you need to know.
When did Jeremy Hunt release?
Before his dismissal, Jeremy Hunt’s predecessor as Chancellor Kwasi Quarting pledged to lay out the government’s medium-term plans for the British economy – along with independent forecasts from the Independent Office for Budget Responsibility (OBR). It is understood that the event will focus on how the Liz Truss administration intends to reduce the national debt.
Kwasi Quarting had specified in this letter the date of November 23. However, despite government ministers insisting this timetable would not change, Mr Kwarteng was forced to change it and bring it forward at the Conservative Party conference in Birmingham. Backbench Tory Conservative MPs wanted it earlier because they wanted to calm market anxiety about the direction the government is taking on the economy.
The new date for the House of Commons address – which is now due to be given by new Chancellor Jeremy Hunt – is Monday, October 31. The Treasury indicated that we won’t have a proper budget event until next spring. However, it seems that the possibility of the Liz Truss administration surviving for that long is questionable.
While the policies Jeremy Hunt is due to announce on Halloween will have an impact on whether markets will restore confidence in government, arguably the most important reveal of the day will be the contents of the Balance Sheet Office forecast. The UK Economy General’s analysis will tell us whether the government can afford the tax cuts that remain in place, including lowering stamp duties.
Its report, which is respected by the markets, will provide the UK’s private sector view as a place to invest. If there is a negative reaction to the OBR results, more economic chaos could occur – although that scenario now appears less likely after Jeremy Hunt’s mini-budget reversal.
What government spending cuts can be announced?
While Jeremy Hunt is expected to announce some tax increases along with deferring some tax cuts, it appears that the chancellor will also reveal significant spending cuts. We’ve already seen one of those cuts, with Hunt revealing that energy prices – a key Truss policy aimed at tackling the immediate cost of the living crisis – will be terminated for 18 months.
Some of the prime minister’s senior ministers have waged an open war on benefits. At the Conservative Party conference, Home Secretary Suella Braverman indicated she wanted deeper rate cuts, while House of Commons Leader Penny Mordaunt said she wanted to see benefits rise with inflation.
If the benefits under consideration – including the Universal Credit and Child Tax Credits – are not raised in line with inflation, Resolution says it will save the government £3 billion a year but send the incomes of the poorest fifth of working-age families. to levels not seen in more than 20 years.
The Joseph Rowntreeoundation, a progressive think-tank, said it would be the “largest intentional, permanent reduction in the base rate of interest in history” and would be “morally untenable” given the tax breaks for the wealthy announced by the government.
What did Kwasi Kwarteng say about the financial event?
Mr Kwarteng said his statement will be accompanied by updated forecasts from the OBR – an independent public body set up by the coalition to assess the government’s economic performance today and provide an assessment of the economic impact the new policies can have.
OBR told MPs after the mini-budget that it had submitted an assessment that met minimum legal requirements. However, this publication was blocked by the chancellor, leading to suggestions that the government was trying to avoid proper scrutiny of its economic agenda.
On September 27, the chancellor added that the upcoming financial event would emphasize the government’s “fiscal discipline” and lay out a “credible plan” to reduce government debt. He also hinted that the government will pursue more policies aimed at boosting economic growth, including “Big Bang 2.0” reforms to financial market regulations.
Mr Kwarteng has scrapped maximum bonuses for bankers in the mini-budget as part of an effort to attract more investment to the City of London, where most UK banks are based. Jeremy Hunt has not moved to reverse this policy and it remains unclear whether the new chancellor will announce any “major” reforms. However, it seems likely that his speech will focus on the discipline and credibility Kwarteng promised.