ENGLAND REVERSES FAILED TAX PLAN
November 7, 2022 - Douglas Myser
England reverses failed tax plan. After the resignation of Finance Minister Kwasi Kwarteng, new Finance Minister Jeremy Hunt reversed the policies that were put in place by Prime Minister Liz Truss. After planned massive tax cuts, during a time of great need for spending due to the ongoing Covid crisis and failing global economy, Truss announced massive tax cuts at the exact wrong time. The upheaval in the financial markets was striking in England and had repercussions world wide, with stock losses running into the billions of dollars worldwide. After a meeting with King Charles, she abruptly reversed course and later the Finance Minister resigned. The ramifications for Truss's future as Prime Minister are not good. She may be one of the shortest tenured Prime Minister's in Great Britain's history. England reverses failed tax plan.
When the reversal of the tax plan was announced by new Finance Minister Hunt, markets cheered the good news and rallied. Sterling traded up one percent against the dollar. Yields on United Kingdom bonds fell sharply, trading down 36 points. Truss also changed course on an energy plan as well, stating that the energy package, designed to subsidize consumer and business energy bills would only run until April and then be reviewed in order to "cost the taxpayer significantly less than planned." The government is capping the amount paid by consumer's for gas and electric at a rate lower than what would normally be paid. This is due to the energy supply crisis caused by Russia and the Ukraine war.
Jeremy Hunt, after being named the new Finance Minister, addressed lawmakers in the House of Commons immediately, to calm the markets, and satisfy politicians that the grave error made by Truss was being reversed and that things were being fixed. He stated that "many difficult decisions will be announced" and stated he will be publishing a completely different fiscal and economic plan for England.