Britain’s new finance minister Hunt rolls back tax plan, reins in energy support – Reuters

LONDON, Oct 17 (Reuters) – Britain’s new finance minister, Jeremy Hunt, on Monday canceled almost all of Prime Minister Liz Truss’ mini-budget that had caused market turmoil and stalled a sweeping plan to energy subsidies, saying the country needed to restore investor confidence. .

Hunt, appointed on Friday to fix public finances after Truss’ economic plan hammered the value of Britain’s assets, said the country needed to generate confidence and stability before it could seek to grow the economy.

He said the changes to the planned tax cuts would bring in 32 billion pounds ($36 billion) each year. Cuts in government spending will also be needed to plug a hole in public finances which the Sunday Times said stood at 72 billion pounds ($81 billion).

“I remain extremely confident about the UK’s long-term economic prospects as we deliver on our mission to grow,” he said in a TV clip. “But growth requires confidence and stability, and the UK will always pay its share.”

The pound extended its gains against the dollar, gaining 1.2% at 11:20 a.m. (1020 GMT), and government bond prices edged higher.

The near-total reversal of the economic plan leaves Truss, Britain’s fourth prime minister in six years, struggling to survive in Downing Street less than six weeks after taking office promising bold tax cuts and deregulation to boost economic growth .

She was forced to back down after markets reacted violently to her plan, hammering the value of the pound and government bond prices and forcing the Bank of England to intervene to protect pension funds.

The Bank stuck to its timetable for ending support on Friday, adding to pressure on Hunt over the weekend to find ways to cut spending before bond markets reopen.

While it was expected to roll back some of the tax cuts, the change to the energy support scheme was unexpected.

Truss had announced a two-year grant scheme to support households and businesses during soaring energy prices, costing £60billion in six months. Hunt said on Monday the program would now run until April, but would become more targeted and capped thereafter.

Hunt would still provide a more comprehensive medium-term fiscal plan as scheduled on Oct. 31, alongside the forecast from the Independent Office for Budget Responsibility, the Treasury said.

($1 = 0.8887 pounds)

Written by William Schomberg and Kate Holton; Editing by Gerry Doyle, Kate Holton and Alex Richardson

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