by Michael Holden and Alistair Smout
LONDON (Reuters) – Britain’s new finance minister, Jeremy Hunt, said on Saturday the government would raise some taxes and public spending would also rise but to a lesser extent than expected, while warning against tough decisions to be taken to restore the credibility of the country’s economic policy.
The UK has been in financial turmoil since former finance minister Kwasi Kwarteng presented a ‘mini-budget’ in late September that included tax cuts and support for households and businesses to deal with the surge energy prices, without specifying the financing of these measures.
On Friday, British Prime Minister Liz Truss announced the dismissal of Kwasi Kwarteng and said her government had taken the decision to forego some of the massive tax relief contained in this budget proposal, thus trying to save her chair herself less 40 days after his appointment to this position.
Liz Truss said that corporate tax would rise from 19% to 25% next April, which could bring nearly 19 billion pounds (22 billion euros) into the state coffers.
“We will have very difficult decisions to make”, declared on Sky News, the new Minister of Finance.
“What people want, what the markets want, what the country needs now is stability,” he added. “No Chancellor (of the Exchequer) can control the markets. But what I can do is show that we can finance our fiscal and spending plans, and for that very tough decisions are needed” , he added.
The vagueness of the government’s previous draft budget, which was supposed to boost growth, had caused the pound to fall and caused a surge in government bond yields, which had forced the Bank of England to intervene urgently.
“Some taxes won’t be reduced as quickly as people want them to be, and some taxes will go up. So it’s going to be difficult,” warned Jeremy Hunt.
The new finance minister said he shared Liz Truss’ core vision of driving economic growth, but said the way Kwasi Kwarteng and the prime minister went about it hadn’t worked.
“There were mistakes. It was a mistake when we are going to be asked for tough tax and spending decisions at all levels to reduce the rate of tax paid by the wealthiest,” he said. he declared.
“It was a mistake to make a blind decision and announce this forecast without giving people the green light from the Office for Budget Responsibility (OBR),” he added, referring to the statement. independent public body that oversees UK public finances.
The British bond market will pass a test on Monday as the Bank of England ended its emergency bond buying program on Friday.
(Report Michael Holden, written by Alistair Smout; French version Claude Chendjou)