LONDON, Oct 17 (Reuters) – New British finance minister Jeremy Hunt on Monday reversed all of Prime Minister Liz Truss’s mini-budgets, which sparked market jitters, and curbed a vast energy subsidy program, saying the country needed to rebuild investor confidence. .
Hunt, who was appointed on Friday to fix the public finances after Truss’s economic plan slashed the value of British assets, said the country needed to build confidence and stability before seeking to grow the economy.
He said changes to the planned tax cuts would raise 32 billion pounds ($36 billion) each year. Government spending cuts will be needed to plug a hole in public finances that the Sunday Times reports is 72 billion pounds ($81 billion).
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“I am very optimistic about the UK’s long-term economic prospects and we are delivering on our mission to move towards growth,” he said in a television clip. “But growth requires confidence and stability, and the UK will always pay its way.”
Sterling extended its gains against the dollar, rising 1.2% at 11.20 am (1020 GMT), and government bond prices rose.
With the economic plan completely upended, Truss, Britain’s fourth prime minister in six years, struggled to survive in Downing Street less than six weeks into power, pledging bold tax cuts and deregulation to restore economic growth.
He was forced to reverse course as markets reacted violently to his plan, hammering the pound and government bond prices and forcing the Bank of England to intervene to protect pension funds.
The bank stuck to its schedule to end support on Friday, adding pressure on Hunt over the weekend to find ways to cut costs before bond markets reopen.
While he was expected to roll back some tax cuts, the change to the energy support program was unexpected.
The Truss announced a two-year subsidy scheme to support households and businesses amid rising energy prices, costing £60bn over six months. Hunt said Monday that the program will now run through April, but will be more targeted and limited after that.
Hunt will still deliver a full medium-term fiscal plan as scheduled on October 31, along with forecasts from the independent Office for Budget Responsibility, the Treasury said.
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By William Schomberg and Kate Holden; Editing by Gerry Doyle, Kate Holden and Alex Richardson
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