Truss team takes gamble with emergency budget

NEW UK Chancellor Kwasi Kwarteng delivers on Friday the first major fiscal event of the new government with the Truss team in a risk-taking mood.

In his emergency budget, Kwarteng will start delivering on Prime Minister Liz Truss’s pledge to bring an end to what she calls a failed UK consensus that has “peddled a particular type of economic policy for 20 years that hasn’t delivered”. One early signal of intent here was the government’s sacking in recent days of Treasury Permanent Secretary Tom Scholar who was seen as a purveyor of this orthodoxy.

With UK GDP virtually stalling in July, and inflation nudging double digits, Truss and Kwarteng have put revitalising growth at the heart of their economic agenda and pledged to “start cutting taxes from day one”. While the scope of Kwarteng’s announcements on Friday are unclear, Truss has previously pledged to reverse April’s rise in national insurance, and abolish next year’s planned corporation tax hike from 19 per cent to 25 per cent. Kwarteng will also detail more of the plans for a £150 billion cap on energy prices. Overall, more than 20 different measures are reported to be announced in the fiscal event. This includes potentially a controversial plan to abolish the cap on banker bonuses, and taking an axe to so-called “nanny state” measures such as the UK’s sugar tax.