Liz Truss, the embattled UK prime minister, apologized on Monday for pushing changes “too far, too fast” and causing economic chaos, but she pledged to stay in office despite a string of embarrassing backpedals.
We went too far and too quickly, she said, adding, “I do want to accept responsibility and express sorry for the mistakes that have been committed.”
She acknowledged that there were concerns about who was now in charge of determining government policy, but insisted that she was “absolutely dedicated to delivering for this country.”
To prevent new market upheaval, her government repealed nearly all of the debt-fueled tax cuts it had announced last month.
Truss’s position is in jeopardy as a result of the shocking appointment of new finance chief Jeremy Hunt, who was parachuted into the role on Friday to replace the fired Kwasi Kwarteng. Conservative MP Roger Gale described Hunt as the “de facto prime minister.”
After analysts predicted the government faced a £60 billion black hole, Hunt projected the tax adjustments would raise approximately £32 billion ($36 billion) year. He also foresaw drastic spending cuts.
No government, according to the chancellor of the exchequer, could control the market, but he emphasized that by taking action, he would bring stability to the public finances and support growth.
With a grim-faced Truss by his side, Hunt addressed parliament, saying, “The prime minister and I agreed yesterday to revoke practically all the tax changes proposed in the growth plan three weeks ago.”
In addition, the chancellor announced the creation of an economic advisory board composed of four outside specialists.
Hours earlier, he had admitted that his predecessor’s budget from last month had hurt the public coffers in a quick televised presentation in which he announced the sudden reversals to uneasy markets.
Truss stated to the BBC that she still supported a “high-growth, low-tax economy,” but that as prime minister, maintaining economic stability was “my responsibility.”
Hunt abandoned plans to eliminate the lowest income tax rate and scaled back the government’s hallmark energy price freeze, bringing it to an end in April rather than late 2024.
He stated that his agency would “evaluate” its energy support program after April.
Along with planned tax-free shopping for tourists and a freeze on alcohol duty, a cut in shareholder dividend tax was also scrapped.
The announcement comes as Britain’s cost of living problem continues to deteriorate and Truss’s ruling Conservative party is losing ground in the polls.
After their recent tax-cutting budget saw bond yields soaring and the pound plunging to a record low on worries about rocketing UK debt, Truss fired her close friend Kwarteng on Friday, igniting intense speculation over her political future one month after taking office.
The British pound soared against the dollar and the euro as a result of Hunt’s move on Monday, and bond yields decreased.
The main focus of last month’s disastrous budget was tax reductions supported by borrowing.
Truss is currently receiving resignation requests from even her own MPs after she made two humiliating budget U-turns, eliminating tax benefits for the wealthiest incomes and on corporate profits.
As we follow through on our promise to get debt reducing as a share of the GDP over the medium term, Hunt admonished, “There will be more painful decisions, I am afraid, on both tax and spending.”
The search for savings will need more effort from all departments, and certain areas of spending will need to be reduced.
In the face of rumors that spending on things like defense, hospitals, and schools will be reduced, Hunt already said he was not taking anything off the table.
Andrew Bailey, the governor of the Bank of England, and the head of the Debt Management Office met with him over the weekend to discuss business.
Following the earlier turbulence, the BoE started buying UK government bonds on a temporary basis; this policy terminated on Friday.
A plot to remove the prime minister is said to have been triggered by the budget controversy.
Senior Conservative MPs were allegedly scheming to topple Truss, according to UK media.
The most recent significant U-turn, which occurred on Monday, came after Truss was elected Tory leader on a tax-cutting program known as “Trussonomics” by analysts.
According to Laura Suter, head of personal finance at stockbroker AJ Bell, “the sound you can hear is the death knell for Trussonomics, with the great majority of her tax-cutting initiatives now committed to the rubbish.”
Hunt will provide his medium-term financial strategy and the Office for Budget Responsibility’s independent economic estimates in two weeks.
However, the dominant opposition Labour party, which is now polling well, claimed that the Tories in power were to blame for the “chaos and debacle.”
The party’s spokesman for finance, Rachel Reeves, told parliament, “This is a Tory catastrophe, produced in Downing Street, but regular working people are paying the price.”