UK proposes a return to austerity to restore lost credibility

New Finance Minister Jeremy Hunt buries Prime Minister Liz Triss’ strategy found on the wire

The new Finance Minister, Jeremy Hunt, has taken less than 24 hours to distance himself from the economic strategy of the Conservative Prime Minister, Liz Truss, which has plunged the United Kingdom into a financial storm that is difficult to overcome.

Hunt admitted this Saturday the “errors” of the Government and warned that he would make “very difficult decisions.” In his first statements on the Sky News network, he pointed to a tax increase accompanied by a cut in public spending to try to balance the accounts. A return to austerity that may not be enough to save the skin of the British prime minister whose authority is highly questioned.

Hunt, former Minister of Foreign Affairs and Health and close to Rishi Sunak – an adversary of Liz Truss in the “Tories” primaries – must now modify the mini-budget announced on September 23 by his predecessor Kwasi Kwarteng, which caused a panic in the markets and plunged the pound to its lowest levels in decades.

Forecasts run by the independent Office for Budget Responsibility are “grim” and suggest there will be a £60bn black hole in public finances by 2026-27. Truss’s decision to bring back the 19% corporate tax increase to 25% will raise £17bn, meaning public spending cuts of up to £ 40bn will still be needed to balance the books. Where will the British Government get the money?

“What I can do is show that we can finance our projects on taxes and spending and that is going to require very difficult decisions,” said Hunt, who was determined to abandon numerous campaign promises by the prime minister such as that he would not cut services. He stated that he will ask all ministries to save more efficiently.

Spending won’t go up as much as people would like and some taxes won’t come down as fast as people want. Some taxes will go up. So it’s going to be difficult.”

For the British media, Hunt now appears as the strong man of the Government while Truss fades with each passing day . The British prime minister’s performance during the brief Downing Street press conference did little to ease the concerns of her ranks.

For the “Financial Times”, the prime minister sacrificed Kwarteng “in a bid to save” her head in Downing Street but “the only thing that unites the (conservative) party is the lack of confidence in Truss”.

Kwarteng himself doubts that the decision to do without him will calm the markets, according to The Times. The second shortest finance minister in UK history believes Truss has “only bought a few more weeks” in office . Even within Downing Street the workers believe it is only a matter of time before she is forced to leave. “Senior officials are now talking openly about his departure,” a Whitehall source told the British newspaper. “They think it’s finished.”

“The dismissal of Kwarteng for implementing policies promoted by the prime minister is another blow to the credibility of the government,” Wyn Grant , professor of Political Science at the University of Warwick ” It is too little and too little to stop the deterioration of the image of Truss” . Grant considers that the latest movements “are not enough to reassure the markets because there is still a huge hole in the government’s finances.” The prime minister, in his opinion, is clearly in danger, but this British political scientist warns that displacing a head of government is not an easy task.

The Prime Minister had breakfast this Saturday with the most pessimistic headlines about her future. “Truss clings to power” published the Daily Telegraph on the front page. According to the newspaper that best knows the ins and outs of the Conservative Party, the “Tory” parliamentarians continue to conspire to oust it from power as soon as possible. “The Times” headlined: “Truss fights for her survival” and “Daily Mail” wondered: “What more can she (and all of us) take?” The tabloid assured in its pages that “the chaos, the confusion and the changes in attitude reached unprecedented extremes”. Truss is starting to get a Theresa May face and it doesn’t look like she can take the pressure of her party and the markets for much longer.

Previous articleSadr’s withdrawal plunges Iraq into chaos
Next articleThis is how the largest explosion ever observed to date was detected