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Britain’s New Finance Chief Repudiates Prime Minister’s Signature Economic Plan


LONDON – Britain’s scorned prime minister, Liz Truss, suffered fresh humiliation on Saturday when her liberal, free-market economic policy agenda for which she won power was taken over by the politician. She appointed the refusal to try to restore the country’s financial stability.

In a bid to salvage her faltering leadership, Ms. Truss on Friday reversed a key tax policy; fired her ally, Kwasi Kwarteng, as the leader of the Excequer; and replaced him with Jeremy Hunt, a more pragmatic cabinet veteran.

Will that prove enough to save Miss Truss, who power seems to be fading after less than six weeks in Downing Street, still to be seen. On Saturday, Mr Hunt spent time on what the British media called “Trussonomics” – a brief British experiment in the promise of a theoretically paid non-refundable tax cut. equals expected economic growth due to lower tax rates and structural changes.

That strategy, butchered by Mr. Kwarteng on September 23caused the pound to plunge and raise borrowing costs for the government, a development that has rippled through the domestic home loan market.

Seeking to stabilize the ship, Mr Hunt, a former Foreign and Health Secretary, on Saturday embraced traditional economic orthodoxy – something Ms Truss had resisted during the summer campaign to return leader of the Conservative Party and thus prime minister.

In an interview with the BBC, Mr Hunt said some taxes would now go up, while others would “not be cut as quickly as people would like.” Spending on government programs “is not going to grow as much as people would like,” he added, preparing voters for some painful cuts to already-stricken budgets. ravaged by rampant inflation.

“What you get in today’s interview is Jeremy Hunt pointing out to the outside world that he has a degree of discredit and what it takes to reset,” said Jill Rutter, a former civil servant and said a senior fellow at the Institute for Government, a London-based research group.

“But he also signaled to the rest of the government, effectively, that he had regained control of economic policy from number 10,” she added, referring to Downing Street, prime minister’s office.

That underscores the fact that the crushing failure of Ms Truss’ signature economic plan led her to “hang herself”, in the words of William Hague, the former leader of the Conservative Party, to lawmakers. She is privately debating whether, and how, she can be removed.

Mr. Kwarteng was not only Ms. Truss’s political ally but also a close friend, and the policies he outlined were drafted with her. So critics question her position as prime minister now that her economic policy has been neutralized. Her mature performance during a brief press conference on Friday was also a reminder that Ms Truss is not a gifted communicator.

Reflecting on Friday’s political turmoil, the front page of The Daily Mail, which supports Ms Truss, featured a photo of her with the headline, “How much more could she (and the rest of us lose)?”

Even for a country that has experienced six years of political turmoil since Brexit referendum 2016, the last few months have been extraordinary. Mr Hunt’s appointment on Friday made him the fourth person to serve as prime minister of the Exchequer within four months.

While praising Mr Kwarteng for his plan to protect consumers from rising energy costs, Mr Hunt admitted that his predecessor terrified financial markets by not explaining how he would fund it. for the tax cuts revealed in the announcement made on September 23.

Crucially, Mr Kwarteng has also abandoned the Office of Budget Responsibility, an independent watchdog that reviews such plans, a decision Mr Hunt described as a mistake that sent the government “flying”. blind” when depositing the pound and the bond market. free fall.

On Friday, Ms. Truss said she would eventually raise corporate taxes, which she has pledged not to do, a move she said would raise £18 billion, or about $20 billion. But that still leaves a significant hole in public finances that Mr Hunt will have to fill when he unveils the revised plans on October 31.

That won’t be easy. As a former Health Secretary, Mr Hunt knows there are limits to what he calls “efficient savings” in already disruptive public services.

“In the Treasury, there’s no reason for you to have big spending cuts that you then have to reverse because services collapse,” said Ms Rutter, a former government department official.

With the financial community scrutinizing every move by the government, it’s vitally important to re-establish credibility, she said.

“You need to believe that the spending cuts will continue – that you have the ability to make them, but also the political desire to do it,” she added, noting that it has instead may prove necessary to recover Mrs. Truss’ last significant tax cut of the base rate of income tax.

Against this backdrop, support for the Conservative Party has collapsed in opinion polls. That has many members of Congress fearing they will lose their seats in the next general election, which must be held by January 2025 at the latest.

The party’s ratings are so bad that some lawmakers think replacing Ms. Truss is their only chance to stay in Congress, but the mechanism for doing so is difficult. It will take a change in the rules to challenge her before September next year.

While it is possible, few are ready for another protracted leadership run, which will only strengthen the party’s image of invincibility. To avoid that, the party will have to rally around a consensus figure, and there’s currently no sign of that.

In short, much focus is on the performance of Mr Hunt, a moderate who voted against Brexit in 2016 and supported Rishi Sunak, the former prime minister who challenged Ms Truss in the leadership race this summer and call her economic plan. A fairy tale.”

For Mr Hunt, becoming chancellor of the Exchequer was a remarkable turning point. In 2019, as foreign secretary, he contested the leadership of the Conservative Party but lost to Boris Johnson, who was was recently sacked as prime minister after a series of ethics scandals and who Ms. Truss replaced.

Although a figure is generally soft, Mr Hunt criticized Mr Johnson during that campaign, accusing him of cowardice for avoiding media scrutiny. When Mr Johnson won, Mr Hunt was removed from government and assigned to the back seat, where he led a select committee on health.

Mr Hunt was re-elected for the leadership post this year, after Mr Johnson was forced to step down, but unsuccessfully, winning little support from his fellow lawmakers.

“Obviously to me, you just hit a big hit on this, and I had mine in 2019,” he wrote on Twitter at the time.

Just a few months later, Hunt found himself taking on the second most important job in government, arguably far more powerful than his boss, who was fighting to stay in Downing Street and who couldn’t afford it. the possibility of firing the second Exchequer prime minister.

“It is clear that the prime minister is on thin ice,” said Ms Rutter, who added, “Liz Truss at the moment is just like a prime minister in name.”

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