LONDON: BritainOn Saturday, the new finance minister warned of impending tax hikes as he admitted ‘mistakes’ in a disastrous budget that still threatens to bring down the prime minister Liz Truss.
‘Truss fights for survival,’ headlined The Times a day after forcing the Chancellor of the Exchequer Kwasi Kwarteng to weather the market turmoil triggered by their budget on September 23.
The Times, Telegraph and other newspapers have reported that senior Tory MPs are still plotting to oust Truss, possibly within days, appalled by the party’s collapse in opinion polls since she replaced Boris Johnson on September 6.
New Chancellor Jeremy Hunt, a former foreign secretary seen as a conservative centrist, has made clear he is tearing up the strategy that brought Truss to 10 Downing Street.
“There were mistakes,” admitted Hunt, who an ally called the government’s new “chief executive” – with Truss now relegated to the role of chairwoman at the back.
Hunt said Kwarteng and Truss erred in trying to cut taxes on top earners and presenting their plan without independent forecasts from the Office for Budget Responsibility.
“The prime minister has recognized that, that’s why I’m here,” Hunt told Sky News.
In one of his first acts when he took office on Friday, the new Chancellor spoke to Bank of England Governor Andrew Bailey, who had to stage costly interventions to calm feverish bond markets.
“They discussed the importance of tackling global inflation and their commitment to economic growth and fiscal discipline,” Treasury tweeted.
Tax cuts were the centerpiece of the ill-fated budget announced by Kwarteng and Truss.
But they were financed by billions in additional borrowing, sending panic in financial markets at the prospect of higher inflation, which has already left British households in the throes of a cost of living crisis.
“We will have some very tough decisions to make,” Hunt said, warning that “every government department” faces spending cuts, including social welfare, health and defence.
“And some taxes won’t come down as quickly as people want. Some taxes will go up.”
Hunt confirmed he would present a new budget statement on October 31, agreeing on BBC radio he had a “clean slate” to start over despite Truss’ earlier promises.
Shortly thereafter, on November 3, the Bank of England will hold its next rate-setting meeting.
In a speech in Washington on Saturday, Bailey warned again that the central bank would “not hesitate” to raise rates to keep soaring inflation under control, threatening further suffering for British households and businesses after the sloppy budget.
Truss fired Kwarteng hours after he returned early from international financial meetings in Washington, and she engineered another turnaround by agreeing to a significant increase in corporate profits taxes.
At a subsequent Downing Street press conference, her first since taking over from Johnson, the Prime Minister answered just four questions, glancing nervously around the room and delivering terse responses before abruptly leaving after just over eight minutes.
“Robotic, hesitant, deaf, defiant and still utterly convinced of the purity and necessity of her mission, Liz Truss killed her political career in minutes,” Times columnist Jenni Russell wrote.
When asked why she herself shouldn’t quit, Truss said she was “absolutely determined to deliver on what I promised.”
But after abandoning the right-wing economic pledges that won him the Conservative leadership election against rival Rishi Sunak, Truss faced mounting criticism that his credibility was in tatters.
“I feel disappointed, very disappointed,” Tory MP Christopher Chope, a Truss loyalist, told BBC television.
Former Tory leader William Hague said Truss’s premiership was “hanging by a thread”, while ex-Chancellor Philip Hammond said she had “thrown away years and years of hard work” to set the party’s record for economic competence.
But as the opposition Labor Party soared in the polls, Welsh Secretary Robert Buckland warned his wayward colleagues against “throwing another prime minister to the wolves”.
Labor leader Keir Starmer accused Truss of “holding on” and demanded a snap general election.
“There are no historical precedents for what they did to our economy,” he said in a speech on Saturday.

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