By Canadian Press

New UK Treasury chief to aims to calm markets with statement

Oct 17, 2022 | 1:41 AM

LONDON (AP) — Britain’s new Treasury chief will announce details of his tax and spending plans Monday, two weeks ahead of schedule, in a bid to calm markets roiled by the government’s economic policies.

Chancellor of the Exchequer Jeremy Hunt is expected to ditch more of the measures announced by the government of Prime Minister Liz Truss on Sept. 23.

Truss drafted Hunt in on Friday after she fired his predecessor, Kwasi Kwarteng. Plans by Truss and Kwarteng for 45 billion pounds ($50 billion) in tax cuts – including an income tax reduction for the highest earners — without an accompanying assessment of how the government would pay for them sent the pound plunging to a record low against the U.S. dollar and the cost of government borrowing soaring. The Bank of England was forced to step in to buy government bonds to prevent the financial crisis from spreading to the wider economy.

The government has since ditched parts of its tax-cutting plan and announced it would make a medium-term fiscal statement on Oct. 31. But the market remained jittery, and Hunt has decided he must make a statement to calm the waters even sooner.

The Treasury said he would make a public statement, followed by a statement to the House of Commons, on Monday afternoon. Hunt spent the weekend in crisis talks with Truss, and also met Bank of England governor Andrew Bailey and the Head of the government’s Debt Management Office.

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The financial fiasco has turned Truss into a lame-duck prime minister, and Conservative lawmakers are agonizing about whether to try to oust her. She took office just six weeks ago after winning a party election to replace Prime Minister Boris Johnson. He was forced out in July after serial ethics scandals ensnared his administration.

The Associated Press