Following the resignation’ of Kwasi Kwarteng as Chancellor last Friday (14 October), and the subsequent announcement that Jeremy Hunt was to replace him, today (Monday 17 October) saw a range of announcements made in an unexpected fiscal statement. 

Making the rounds of national media outlets over the weekend and this morning, Chancellor Jeremy Hunt announced a series of backtracks (or “U-turns”) on the mini-Budget’s tax and spend policies, which were confirmed in a statement to MPs in the House of Commons. 

Financial markets have been especially negative in their reaction to the mini-Budget with the pound’s value falling in international currency markets. The Bank of England raised interest rates in September which was followed by £60bn being provided in emergency support to pension funds. 

Today’s announcement sees the basic rate of income tax return to 20p in the pound, previously scheduled corporation tax increases return, and the planned cut for higher rate taxpayers scrapped. It also makes clear that the current energy support package is only in place until April 2023.

Watch the Chancellor @Jeremy_Hunt’s statement outlining the measures being brought forward from the Medium-Term Fiscal Plan that will support fiscal sustainability.https://t.co/faGd6A9YVp pic.twitter.com/1MWp4Y2ewv

— HM Treasury (@hmtreasury) October 17, 2022

ACE welcomed moves made in the mini-Budget around speeding up infrastructure delivery, the 38 proposed investment zones across England, but raised concerns over the seemingly short-termist approach and how it impacted on broader Net Zero and Levelling Up aims.  

Commenting on today’s news, Guto Davies, head of policy at ACE said: “All businesses – no matter the sector they work in – want stability. It’s fair to say that the current environment in Westminster is doing little for business planning nor for building confidence – crucial if we are to navigate the challenging times which lie ahead.” 

“Whether the new Chancellor’s appointment and his announced U-Turns are enough for financial markets, Conservative MPs and the general public, remains to be seen. It’s clear to even amateur commentators that Prime Minister Liz Truss is in a vulnerable position politically and that the only thing that is certain is that uncertainty looks set to continue in the near-term.” 

“With this in mind, signing-up to our weekly political bulletin, curated by ACE’s policy team, is the best way of keeping on top of events in Westminster and in the devolved nations, and how it impacts on our sector.”