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WORLD NEWS Tuesday 18 OcTOber 2022
UK leader in peril after Treasury chief axes ‘Trussonomics’

By JILL LAWLESS and DANI- markets, he said Britain mediately spooked the fi- facing a cost-of-living crisis 3.495% on Sept. 22. Bond
CA KIRKA was “a country that funds nancial markets. The cuts as food, fuel and mortgage yields tend to rise as the risk
Associated Press our promises and pays our fueled investor concerns prices soar. of a borrower defaulting in-
LONDON (AP) — The U.K.’s debts.” about unsustainable levels Hunt told lawmakers that creases.
new Treasury chief ripped Paul Johnson, director of
up the government’s eco- the Institute for Fiscal Stud-
nomic plan on Monday, ies think tank, said Mon-
dramatically reversing most day’s announcements
of the tax cuts and spend- would not be enough “to
ing plans that new Prime undo the damage caused
Minister Liz Truss announced by the debacle of the last
less than a month ago. The few weeks. But they are
move raises more questions big, welcome, clear steps
about how long the belea- in the right direction.”
guered British leader can The financial fiasco has
stay in office. turned Truss into a lame-
Chancellor of the Exche- duck prime minister. She
quer Jeremy Hunt, said he took office just six weeks
was scrapping “almost all” ago after winning a party
of Truss’ tax cuts, along with election to replace Prime
her flagship energy policy Minister Boris Johnson, who
and her promiserepeated was forced out in July after
just last week that there ethics scandals ensnared
will be no public spending his administration. Many
cuts. Conservatives now believe
While the reversal of policy their only hope is to replace
calmed financial markets Truss.
and helped restore the The Conservative Party still
government’s economic commands a large major-
credibility, it further under- ity in Parliament, and in
mined the prime minister’s theory has two years until
rapidly crumbling authority a national election must
and fueled calls for her to be held. Polls suggest hold-
step down before her de- ing an election now would
spairing Conservative Party be a wipeout for the Tories,
forces her out. Jeremy Hunt leaves 10 Downing Street in London after he was appointed Chancellor of the with the Labour Party win-
Truss declined to attend Exchequer following the resignation of Kwasi Kwarteng, Friday Oct. 14, 2022. ning a big majority.
the House of Commons to Associated Press Labour Party econom-
answer a question on the ics spokeswoman Rachel
economy from the leader Reeves said Truss was
of the opposition, sending “barely in office, and she
House of Commons lead- “And when that is ques- of government borrowing, the measures he an- is certainly not in power,”
er Penny Mordaunt in her tioned, as it has been, this which pushed up govern- nounced would save 32 bil- and claimed the Conser-
place. Mordaunt denied a government will take the ment borrowing costs, lion pounds a year, but that vatives could not fix the
lawmaker’s suggestion that difficult decisions necessary raised home mortgage spending cuts were also problems they had caused.
Truss was “cowering under to ensure there is trust and costs and sent the pound coming. “They’ve set fire to every-
her desk” to avoid scrutiny. confidence in our national plummeting to an all-time “There remain, I’m afraid, thing.
“The prime minister is not finances,” Hunt said. low against the dollar. many difficult decisions to Now they insist it is all fine,”
under a desk,” Mordaunt Such major policy an- The Bank of England was be announced” in the fuller she said. “The truth is an
said, words hardly likely to nouncements are normally forced to intervene to pro- budget statement on Oct. arsonist is still an arsonist,
inspire confidence in the made first in the House of tect pension funds, which 31, he said. even if he runs back into
leader who only came to Commons, but Hunt dis- were squeezed by volatility Hunt also said he was set- the burning building with a
power last month. closed most of the details in the bond market. ting up a new Economic bucket of water.”
Truss’ spokesman said the hours in advance in a tele- Over the weekend, Hunt Advisory Council of econo- Chris Beauchamp, chief
prime minister and Hunt vised statement. has been dismantling mists and investment bank- market analyst at online

had jointly agreed on the Hunt was appointed Friday that economic plan. The ers to help inform policy trading firm IG, said the
economic changes. But after Truss fired his prede- government had already a far cry from Truss’ bid to markets were reassured by
Hunt told Conservative law- cessor Kwasi Kwarteng, ditched parts of its tax-cut- throw out economic “or- the presence of Hunt, a for-
makers that Truss “backed who spent less than six ting plan and announced thodoxy.” mer foreign U.K. secretary
him to the hilt in making weeks in the Treasury job. it would make a medium- The pound rose more than and health chief.
difficult decisions” suggest- Hunt is seeking to restore term fiscal statement on 1% to above $1.13 in Lon- “I think markets in some
ing he has a free hand to the Conservative govern- Oct. 31, weeks earlier than don after Hunt’s morn- ways would rather things
make policy. ment’s credibility for sound previously scheduled. ing announcement. That just stayed as they are for
With Truss sitting silently be- fiscal policy after Truss and On Monday, Hunt went fur- pushed the U.K. currency a while,” he said. “OK, the
side him, Hunt told lawmak- Kwarteng rushed out a ther. back above where it was PM has found her author-
ers that he was canceling plan for tax cuts without He scaled back a cap on trading on Sept. 22, the ity quite truncated. But at
Truss’ plan to reduce the detailing how they would energy prices designed day before Kwarteng an- least you’ve got the chan-
basic rate of income tax pay for them. to help households pay nounced the tax cuts. cellor in place almost run-
by 1 percentage point and Truss and Kwarteng jointly their bills. It will now be re- Yields on 10-year govern- ning the country ...
most of her other libertar- came up with a Sept. 23 viewed in April rather than ment bonds, an indicator “I think they’re quite con-
ian economic policies. In announcement of 45 bil- lasting two years sweep- of government borrowing tent with that slightly odd
a message aimed squarely lion pounds ($50 billion) in ing away one of Truss’ sig- costs, fell to 3.947% from state of affairs, for the
at reassuring the financial unfunded tax cuts that im- nature plans to help Britons 4.327% on Friday. It was moment.”q