The UK is under great pressure at the moment with the recent political changeover. However, markets cheered the announcement from Hunt.

Jeremey Hunt, the new finance minister, has announced that the majority of the controversial tax measures brought forward by Kwasi Kwarteng will be reversed. The U-turn will involve eliminating the cut in the lowest rate of income tax from 20-19%. As well as the reversal of off-payroll working reforms, cuts to dividend tax rates and the freeze on alcohol duty rates. The reversed tax cuts totalled £32 billion a year. 

His plans involve: 

• Delaying proposed cuts in income tax
• Means-testing energy payments from next April. The cap on energy prices charged to households is now only guaranteed until next April
• Returning corporation tax to 25%
• Keeping the top rate of tax at 45%
• Shelving capital projects
• Scrapping reintroduction of VAT-free shopping for tourists
• Scrapping the freeze on alcohol duty rates

Markets eased up slightly after the announcement with the pound trading over 1% against the dollar at 11:30 am GMT. Hunt is also scheduled to deliver a more in depth fiscal plan on 31 October. 

Hunt also stated that the designed energy package to fund consumer and business energy bills would only run until April. It will only then be reviewed in order to “cost the taxpayer significantly less than planned”. He also stated, “No government can control markets, but every government can give certainty about the sustainability of public finances. That is one of the many factors that influence how markets behave”.

Sign of relief?

The reigning Conservative Party will be hoping that the newly appointed finance minister, who has had prior roles as health and foreign secretary, will provide the government with a much-needed lift in support.

Political polling reveals that the party dropping to lows has not been seen since the 1990s. A former deputy governor at the Bank of England, John Gieve, told the BBC this morning that leaks from the Treasury suggested the UK deficit was nearly £70 billion.   

The UK is under heavy pressure at the moment, Jeremy Hunt may not be the knight in shining armour and create a magical turnaround alone, but the party hopes he can at least guide the UK in the right direction. Amongst the rapid sacking of Kwasi Kwarteng and the appointment of Jermey Hunt, confidence in PM Liz Truss declined further. She has been forced to U-turn on all the proposals after markets reacted badly, only six weeks into her tenure. 

There are reports that MPs are calling for her to go, with apparent letters of no confidence already floating around the Commons. Now that Truss and Hunt have abandoned the existing energy price cap scheme, she has left even less reason for MPs and peers to support her.

In an interview with the BBC on Sunday, Hunt affirmed that Truss is “still in charge”. He claimed that the PM has changed, defending her credibility as a leader. When asked why she should be trusted, he said that Truss has listened and is willing to do the most difficult thing in politics, which is to change tack. “What we’re going to do is to show not just what we want, but how we’re going to get there,” he said.

He added that he wants to be a good chancellor, and is not biding his time for Tory leadership, despite having previously ran for the position. He conceded that there are “difficult decisions” to come in the next two weeks ahead of the 31 October budget.

(sources: CNBC.com, Reuters, BBC News, Tortoise Media)