Chair of the Treasury Select Committee Mel Stride has called for a ‘reset’ over the Government’s mini-budget statement and unfunded tax cuts. There are rumours in Westminster that Prime Minister Liz Truss and Chancellor Kwasi Kwarteng are about to u-turn on their signature policies after the latter was summoned home early from Washington, where he was visiting the International Monetary Fund.
Government U-turn
The Government had wanted to scrap a rise in corporation tax. However, experts believe that they will now go ahead with the rise. This is despite the fact that keeping it at its current rate past April 2023 was a cornerstone of Truss’s campaign to grow the economy.
Stride believes a u-turn is necessary to calm the markets, which reacted badly to the unfunded mini-budget:
Bad week for the PM
The potential u-turn comes after another tough week in the PM’s short time in office. The Bank of England said it would stop buying government bonds from today. The course of action was an attempt to save pension funds following the market crisis after the mini-budget. Truss also met with the King and did not enjoy the warmest of welcomes.
Cameras caught the moment King Charles asked Truss whether she was “back again,” before commenting “dear, oh dear.” It’s not really understood what the monarch meant by his comments, but it will do nothing to boost the confidence of the Prime Minister who is battling in-fighting in her party.
Insiders believe the Government wants to make a statement before the markets open on Monday. The markets rallied on hearing the rumours of a u-turn, but a lot will depend on what they announce today. Some think they might raise corporation tax by one or two percentage points instead of the intended six.
