UK Prime Minister Liz Truss will make a statement and hold a news conference later on Friday, Downing Street officials said amid fierce speculation she is about to u-turn again on her government’s disastrous mini-budget – this time on a planned cut in corporation tax.
Finance Minister Kwasi Kwarteng, who delivered the proposed packaged of unfunded tax cuts that sent markets into a tailspin, left a meeting of the International Monetary Fund in Washington a day early for urgent talks with Truss.
Speculation mounted on Thursday that the government was set to scrap all or parts of the mini-budget, which included £45bn of unfunded tax cuts but no spending review or economic forecasts. The pound rallied while gilt yields ticked lower on the speculation, although there was no official statement from Downing Street.
Kwarteng’s early return to London coincides with the Bank of England ending its emergency £65bn bond-buying package of support, which it launched in the aftermath of the mini-budget. The statement caused the pound to plunge and gilt yields to rise, and the central bank was forced to step in to prevent at-risk pension funds from collapsing.
The government has already scrapped the politically-unpopular planned abolition of the 45p tax rate and has brought forward its spending plans – and the publication of the Office for Budget Responsibility’s forecasts – to 31 October, from the originally scheduled 23 November.
Reporting by Frank Prenesti and Abigail Townsend for Sharecast.com
