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Looking sick after six weeks – new British PM struggles to survive in job

New UK finance minister Jeremy Hunt has promised to win back his country’s economic credibility by fully accounting for the government’s tax and spending plans while insisting Prime Minister Liz Truss remains in charge.

Oct 17, 2022, updated Oct 17, 2022
The political demise of Liz Truss had a devastating impact on AJ Lucas  (AP Photo/Kirsty Wigglesworth)

The political demise of Liz Truss had a devastating impact on AJ Lucas (AP Photo/Kirsty Wigglesworth)

Truss appointed Hunt on Friday in an attempt to rescue her leadership as confidence in her ability to run the country drained away within both her own Conservative Party and international financial markets.

Sunday’s newspapers were rife with stories of plans to replace her.

Investors have sold UK government bonds heavily since September 23 when Hunt’s predecessor, Kwasi Kwarteng, announced a string of unfunded tax cuts without publishing a set of independent economic forecasts.

“What I’m going to do… is to show the markets, the world, indeed people watching at home, that we can properly account for every penny of our tax and spending plans,” Hunt told BBC television in an interview broadcast on Sunday.

Truss fired Kwarteng on Friday and has ditched key parts of the program they agreed together.

The chaos has fuelled discontent in the governing party, already splintered before Friday and falling far behind the opposition Labour Party in opinion polls.

Several Conservative MPs on Sunday separately called for her resignation.

“In recent weeks, I have watched as the Government has undermined Britain’s economic credibility & fractured our party irreparably. Enough is enough,” MP Jamie Wallis wrote on Twitter, publishing a letter to Truss asking her to resign.

His fellow Conservative Crispin Blunt told Channel 4’s The Andrew Neil Show that for Truss “the game is up, and it’s now a question as to how the succession is managed”.

A lawmaker on the committee which organises leadership contests said the rules, which protect Truss from a formal challenge for 12 months, could be changed if an “overwhelming majority” of Conservative lawmakers wanted that.

“I don’t think we’re anywhere near that at the present time,” Geoffrey Clifton-Brown, Treasurer of the 1922 Committee, told Sky News.

After effectively dismantling the prime minister’s gamble that tax cuts would spur economic growth and pay for public spending, Hunt has said he will go further including imposing tighter spending controls and some tax rises.

“I’m going to be asking every government department to find further efficiency savings,” he said, adding that while he wanted to keep other tax cuts the government has promised, he ruled nothing out in his drive to balance the books.

He will set out details in a fiscal statement on October 31.

The Sunday Times said initial forecasts from the Office for Budget Responsibility showed a 72 billion pound ($A130 billion) shortfall in the current plans.

The paper also said Hunt would delay a planned cut to the basic rate of income tax.

Asked if markets would have confidence in his plans, Hunt told the BBC: “Well, I think, you know, for people trading the markets, actions speak louder than words.”

A first test will come on Monday morning when trading in the UK’s battered government bonds resumes without the support of the Bank of England’s emergency bond-buying program, which expired on Friday.

“Basically we’ve moved from looking not too dissimilar from the US or Germany as a proposition to lend, to looking more like Italy and Greece,” former Bank of England Deputy Governor Charlie Bean told Sky.

While Hunt seeks to fend off financial market pressure, Truss has to deal with mutiny from within her party.

Reports citing anonymous sources filled Sunday’s newspapers, with defence minister Ben Wallace touted as senior MPs’ preferred replacement by the Sunday Mirror, and Rishi Sunak – who Truss defeated last month in a leadership contest that balloted Conservative Party members – named as another possible successor by the Sun on Sunday.

Hunt was asked whether, given the drastic policy change he has overseen, he was now effectively running the government.

“The prime minister is in charge,” he said.

“She has changed the way we’re going to get there. She hasn’t changed the destination, which is to get the country growing.”

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