From 1h ago 06. 55 BST Introduction: Hunt brings forward fiscal announcements to calm markets Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets. The financial markets will give their verdict on Liz Truss’s government today as the PM clings onto power in the face of growing pressure to quit.
And in an attempt to reassure investors about Britain’s financial stability, new chancellor Jeremy Hunt is to announce some tax and spending plans today – the latest in a series of u-turns from the government. In a surprise move, the Treasury has announced that the Chancellor will make a statement later today, which will “bring forward measures from the Medium-Term Fiscal Plan that will support fiscal sustainability”. Hunt will also give a statement to parliament on the plan.
By announcing these tax and spending measures a fortnight earlier than expected, Hunt is trying to reassure jittery markets and turn around a loss of confidence in the government’s fiscal plans. Jeremy Hunt to make snap statement on medium-term fiscal plan Read more Over the weekend, Hunt unceremoniously chucked Truss and Kwarteng’s disastrous mini-budget under the bus. Instead of unfunded tax cuts to spur growth, Hunt warned that some taxes will rise and spending will be squeezed in an attempt to persuade international investors Britain is a reliable, responsible country.
Not the easiest task, given the hammering which recent events have dealt to confidence. “I want to do the right thing for the British people” Newly-appointed Chancellor Jeremy Hunt says his new government position is an “honour” and adds that there are “very difficult decisions on spending and tax” ahead Latest 👉 https://t. co/sX9oqE2Kqz 📺 Sky 501 and YouTube pic.
twitter. com/8R3rA0rgat — Sky News (@SkyNews) October 15, 2022 With the plan to cut corporation tax already scrappe d, Hunt could delay plans to cut a penny off income tax by a year, or demand even more ‘efficiency savings’ from government departments, despite there being little to trim in, say, health or education. The medium-term fiscal plan, to show how the UK plans to balance the books, is scheduled for 31 October, when we’ll also get the Office for Budget Responsibility’s forecasts.
While the chancellor tries to calm nerves, the government bond market no longer has the safety net provided by the Bank of England . Its emergency pledge to buy up long-dated gilts ended on Friday afternoon, as planned, after giving pension funds the opportunity to extricate themselves from the ‘doom loop’ of falling bond prices after the mini-budget. UK gilts will resume trading at 8am this morning, when the London stock market also opens.
If borrowing costs push higher, it could intensify calls for more change in Downing Street, or even spur the BoE into fresh action. Analysts have warned that we could face another week of turbulent markets. UK investors brace for another week of market turbulence Read more UK assets have been badly hit by the British government’s loss of credibility, as we saw on Friday afternoon.
Bond prices had been recovering on Friday morning, but lurched lower after Truss’s unimpressive press conference – announcing the exit of Kwasi Kwarteng – didn’t offer much reassurance of how the UK’s fiscal black hole – thought to exceed £70bn – will be filled. And in Westminster, the beleaguered prime minister will attempt to shore up her crumbling support by gathering her cabinet ministers at No 10 tonight. But some MPs went public yesterday calling Truss to quit, including backbencher Jamie Wallis — who has confirmed to the Guardian that he had submitted a no confidence letter — and veteran Tory MP Crispin Blunt.
Monday’s @guardian front page: Truss fights for survival as Tory rebel MPs warn that ‘game is up’. https://t. co/534aY3NeW6 pic.
twitter. com/vyXRROyCpw — Pippa Crerar (@PippaCrerar) October 16, 2022 The agenda 8am BST: China publishes FDI (foreign direct investment) figures for September 9am BST: Italian inflation rate for September 11am BST: Jeremy Hunt expected to announce tax and spending plans 11am BST: German Bundesbank’s monthly report 1. 30pm BST: Empire State manufacturing survey of New York factories Updated at 07.
42 BST Key events 12m ago UK to be in recession until summer 2023 28m ago Mel Stride: Strong start by chancellor Hunt 39m ago Analyst: Hunt sets scene for bonfire of tax cuts 54m ago Treasury: Chancellor to bring forward measures to support fiscal sustainability. 1h ago Pound higher in early trading 1h ago Introduction: Hunt brings forward fiscal announcements to calm markets Filters BETA Key events ( 6 ) Jeremy Hunt ( 7 ) Liz Truss ( 5 ) UK ( 4 ) Bank of England ( 3 ) Treasury Committee ( 3 ) 5m ago 07. 47 BST Jeremy Hunt is trying to prevent a rout in the bond market by rushing out new tax and spending measures today.
It’s an extraordinary situation, explains ITV’s Robert Peston : We haven’t had an economic crisis like this since the 1970s. Fear of a crash in gilts, government bonds, means chancellor is “bringing forward measures from the medium-term fiscal plan” to a few hours time, to get debt down. He will make… pic.
twitter. com/X5dbkMXB89 — Robert Peston (@Peston) October 17, 2022 make an emergency statement – and will also address MPs in the Commons later today. This is EXTRAORDINARY.
Such a reversal of the mini budget. Gilt market opens in 25 mins. Let’s see if investors are reassured.
If they’re not, the PM and while government in deep… — Robert Peston (@Peston) October 17, 2022 trouble, as are all of us – because it would signal interest rates surging further for all of us — Robert Peston (@Peston) October 17, 2022 12m ago 07. 40 BST UK to be in recession until summer 2023 Jeremy Hunt will announce tax and spending measures today under darkening economic stormclouds. Economists at the EY ITEM Club have predicted that the UK economy will drop into recession, and remain there until next summer, after downgrading its economic forecasts.
Its Autumn Forecast warned that: . css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} High energy prices, elevated inflation, rising interest rates and global economic weakness mean the UK economy is expected to be in recession until the middle of 2023.
EY ITEM Club predicts that UK economic output fell by 0. 3% in the third quarter of this year, and will then contract by around 0. 2% each quarter from October-December to April-June 2023.
GDP is now forecast to shrink by 0. 3% in 2023 – a downgrade from the 1% growth forecast in the summer, while the growth forecast for 2022 has been upgraded to 4. 3% from 3.
7%. Investment bank Goldman Sachs also predicted the UK will enter a deeper recession than previously expected. The US investment bank downgraded its outlook for Britain, forecasting the UK economy would shrink by 1% next year, down from its previous estimate for a 0.
4% contraction. Goldman Sachs said that last week’s u-turn to increase corporation tax to 25% was a factor: . css-knbk2a{height:1em;width:1.
5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} “Folding in weaker growth momentum, significantly tighter financial conditions, and the higher corporation tax from next April, we downgrade our UK growth outlook further and now expect a more significant recession. ” Goldman Sachs expects worse UK recession in 2023 Read more 28m ago 07. 24 BST Mel Stride: Strong start by chancellor Hunt Jeremy Hunt’s decision to announce some tax and spending measures today is a wise decision, says Mel Stride , the Conservative MP who chairs parliament’s Treasury Committee.
. css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} “Strong start by Jeremy Hunt as chancellor,” “Gets what needs to be done and is acting fast.
Surprising markets positively on the upside with an early statement to House of Commons today is a wise move. Message is ‘we get what needs to be done and it’s being sorted’. ” Strong start by @Jeremy_Hunt as Chancellor.
Gets what needs to be done and is acting fast. Surprising markets positively on the upside with an early statement to @HouseofCommons today is a wise move. Message is ‘we get what needs to be done and it’s being sorted.
’ — Mel Stride (@MelJStride) October 17, 2022 31m ago 07. 21 BST Today’s early morning statement shows just how nervous the government, and the Bank of England, are about the UK bond market, points out Ed Conway of Sky News : More u-turns on the way today. Statement from Treasury below.
Fact that this came unusually early this morning, before markets open, is not a coincidence. Still a LOT of nerves in Whitehall and Threadneedle St about how things are looking in the gilts market. pic.
twitter. com/EeS7iCJdJS — Ed Conway (@EdConwaySky) October 17, 2022 We’ll find out at 8am if the bond market is calmed…. 34m ago 07.
19 BST The pound is being lifted by rising investor confidence that more of Prime Minister Liz Truss’s package of unfunded tax cuts may be reversed, reports Bloomberg : . css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} “It does indicate that they are moving back to some degree of fiscal probity and employing a slightly more prudent fiscal outlook,” said Peter Kinsella, global head of FX strategy at Union Bancaire Privee UBP SA in London.
The government’s steps should be enough to “stabilize” the currency before the announcement of the medium-term fiscal plan at the end of the month, he added. Pound rallies against dollar after UK government confirms Chancellor Jeremy Hunt will make statement today on fiscal plans https://t. co/17nlFeWFzA pic.
twitter. com/Auo6OCbEtJ — Bloomberg UK (@BloombergUK) October 17, 2022 39m ago 07. 14 BST Analyst: Hunt sets scene for bonfire of tax cuts Fears that the bond markets will take fright again has prompted Jeremy Hunt to take “fresh damage limitation measures”, comments Susannah Streeter , senior investment and markets analyst at Hargreaves Lansdown .
She expects a roll-back of planned tax cuts, as the chancellor tries to calm financial markets. . css-knbk2a{height:1em;width:1.
5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} It looks highly likely that the 1p cut in the base rate of income tax set to be postponed, we could see changes to the new VAT-free shopping scheme for tourists, and possibly a reversal of plans to relax the way tax is collected from self-employed people. We could even see a rise in VAT. But filling the black holes in the government’s finances will be far from easy so highly unpalatable spending cuts across government departments are also expected.
Jeremy Hunt had already been setting the scene for this bonfire of tax cuts over the weekend. Streeter adds that Hunt’s pledges of fiscal responsibility, and speculation that Liz Truss’ days are numbered , both lifted the pound back towards $1. 13 this morning.
. css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} Since the emergency budget statement was announced, it’s gained further ground.
But sterling is still weaker than before Kwasi Kwarteng was ruthlessly axed, with the chief architect of the disastrous mini-budget still, for now, in place. Updated at 07. 14 BST 50m ago 07.
03 BST Steven Swinford of The Times reports that Liz Truss and Jeremy Hunt have agreed to defer the 1p cut in the basic rate of income tax until 2024. Breaking: Jeremy Hunt expected to go even further in ripping up mini budget *today* He’s making announcement in Commons to support fiscal stability Liz Truss & Hunt signed off deferring 1p cut in income tax until 2024 at Chequers yesterday — Steven Swinford (@Steven_Swinford) October 17, 2022 Former chancellor Kwasi Kwarteng had announced in the mini-budget that the basic rate of income tax would be cut from 20% to 19% from April 2023, a year early, to help with the cost of living crisis. 54m ago 06.
58 BST Treasury: Chancellor to bring forward measures to support fiscal sustainability. Here’s the full statement from the Treasury: . css-knbk2a{height:1em;width:1.
5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} The Chancellor will make a statement later today, bringing forward measures from the Medium-Term Fiscal Plan that will support fiscal sustainability. He will also make a statement in the House of Commons this afternoon. This follows the Prime Minister’s statement on Friday, and further conversations between the Prime Minister and the Chancellor over the weekend, to ensure sustainable public finances underpin economic growth.
The Chancellor will then deliver the full Medium-Term Fiscal Plan to be published alongside a forecast from the independent Office for Budget Responsibility on 31 October. The Chancellor met with the Governor of the Bank of England and the Head of the Debt Management Office last night to brief them on these plans. The Chancellor @Jeremy_Hunt will make a statement this morning, bringing forward measures from the Medium-Term Fiscal Plan that will support fiscal sustainability.
A statement to @HouseofCommons will follow this afternoon. Read more: https://t. co/iA4DkquxaP pic.
twitter. com/d29N5vaxrC — HM Treasury (@hmtreasury) October 17, 2022 1h ago 06. 56 BST Pound higher in early trading The pound has strengthened this morning, as investors react to the news that Jeremy Hunt is fast-tracking some tax and spending plans to today .
Sterling has gained over a cent to $1. 128 against the US dollar, recovering much of Friday’s losses. The pound vs the US dollar Photograph: Refinitiv The financial markets are mainly focused on the pound today, explains Naeem Aslam , chief market analyst at Avatrade : .
css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} Prime Minister Liz Truss has appointed a new Chancellor of the Exchequer in place, and one could say at this stage that the mini-budget has only done harm to the British economy and its currency, as most of the policies that were announced will be reversed. It appears that the UK will have to adopt strict austerity measures now in order to bring its economy back on track.
But the timing of introducing austerity is not the best as the government will have to use austerity when the public is already struggling with higher interest rates which are going to only increase in the coming months and quarters. Increasing taxes, which is what the new Chancellor is hinting, will only increase the pressure on the British public as many are struggling to meet their daily needs already. #BREAKING Chancellor Jeremy Hunt will today fast track billions of pounds worth of tax and spending measures pic.
twitter. com/09mwh0bjPJ — PA Media (@PA) October 17, 2022 1h ago 06. 55 BST Introduction: Hunt brings forward fiscal announcements to calm markets Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.
The financial markets will give their verdict on Liz Truss’s government today as the PM clings onto power in the face of growing pressure to quit. And in an attempt to reassure investors about Britain’s financial stability, new chancellor Jeremy Hunt is to announce some tax and spending plans today – the latest in a series of u-turns from the government. In a surprise move, the Treasury has announced that the Chancellor will make a statement later today, which will “bring forward measures from the Medium-Term Fiscal Plan that will support fiscal sustainability”.
Hunt will also give a statement to parliament on the plan. By announcing these tax and spending measures a fortnight earlier than expected, Hunt is trying to reassure jittery markets and turn around a loss of confidence in the government’s fiscal plans. Jeremy Hunt to make snap statement on medium-term fiscal plan Read more Over the weekend, Hunt unceremoniously chucked Truss and Kwarteng’s disastrous mini-budget under the bus.
Instead of unfunded tax cuts to spur growth, Hunt warned that some taxes will rise and spending will be squeezed in an attempt to persuade international investors Britain is a reliable, responsible country. Not the easiest task, given the hammering which recent events have dealt to confidence. “I want to do the right thing for the British people” Newly-appointed Chancellor Jeremy Hunt says his new government position is an “honour” and adds that there are “very difficult decisions on spending and tax” ahead Latest 👉 https://t.
co/sX9oqE2Kqz 📺 Sky 501 and YouTube pic. twitter. com/8R3rA0rgat — Sky News (@SkyNews) October 15, 2022 With the plan to cut corporation tax already scrappe d, Hunt could delay plans to cut a penny off income tax by a year, or demand even more ‘efficiency savings’ from government departments, despite there being little to trim in, say, health or education.
The medium-term fiscal plan, to show how the UK plans to balance the books, is scheduled for 31 October, when we’ll also get the Office for Budget Responsibility’s forecasts. While the chancellor tries to calm nerves, the government bond market no longer has the safety net provided by the Bank of England . Its emergency pledge to buy up long-dated gilts ended on Friday afternoon, as planned, after giving pension funds the opportunity to extricate themselves from the ‘doom loop’ of falling bond prices after the mini-budget.
UK gilts will resume trading at 8am this morning, when the London stock market also opens. If borrowing costs push higher, it could intensify calls for more change in Downing Street, or even spur the BoE into fresh action. Analysts have warned that we could face another week of turbulent markets.
UK investors brace for another week of market turbulence Read more UK assets have been badly hit by the British government’s loss of credibility, as we saw on Friday afternoon. Bond prices had been recovering on Friday morning, but lurched lower after Truss’s unimpressive press conference – announcing the exit of Kwasi Kwarteng – didn’t offer much reassurance of how the UK’s fiscal black hole – thought to exceed £70bn – will be filled. And in Westminster, the beleaguered prime minister will attempt to shore up her crumbling support by gathering her cabinet ministers at No 10 tonight.
But some MPs went public yesterday calling Truss to quit, including backbencher Jamie Wallis — who has confirmed to the Guardian that he had submitted a no confidence letter — and veteran Tory MP Crispin Blunt. Monday’s @guardian front page: Truss fights for survival as Tory rebel MPs warn that ‘game is up’. https://t.
co/534aY3NeW6 pic. twitter. com/vyXRROyCpw — Pippa Crerar (@PippaCrerar) October 16, 2022 The agenda 8am BST: China publishes FDI (foreign direct investment) figures for September 9am BST: Italian inflation rate for September 11am BST: Jeremy Hunt expected to announce tax and spending plans 11am BST: German Bundesbank’s monthly report 1.
30pm BST: Empire State manufacturing survey of New York factories Updated at 07. 42 BST Topics Business Business live Economics Stock markets FTSE Sterling Bank of England Jeremy Hunt Reuse this content.
From: theguardian
URL: https://www.theguardian.com/business/live/2022/oct/17/pound-jeremy-hunt-tax-spending-bond-yields-bank-of-england-business-live
