Jeremy Hunt: There were mistakes in mini-budget – and some taxes will go up
The new chancellor Jeremy Hunt has said there “were mistakes” in Liz Truss and Kwasi Kwarteng’s mini-budget.
Speaking to Sky News on Saturday, Mr Hunt said: “It was a mistake when we were going to be asking for difficult decisions across the board on tax and spending to cut the rate of tax paid by the very wealthiest.”
Hunt warns of ‘difficult decisions’ – follow politics latest
He added that it was an error to “fly blind” by not accompanying the ‘fiscal event’ with an economic forecast by the Office for Budget Responsibility, which many argue sent the financial markets into turmoil.
On tax cuts, he said: “We won’t have the speed of tax cuts we were hoping for and some taxes will go up.”
Asked if this would mean a return to austerity, he replied: “I don’t think we’re talking about austerity in the way we had it in 2010. But we’re going to have to take tough decisions on both spending and tax.”
Mr Hunt was appointed chancellor on Friday, an hour after his predecessor Kwasi Kwarteng was sacked after just 38 days in the job.
While his appointment was welcomed by some Tory MPs as “an experienced pair of hands”, others questioned why Mr Kwarteng was the one who had to go when he was pursuing policies Ms Truss espoused in her leadership campaign.
At a hastily-arranged news conference in Downing Street on Friday, the prime minister dismissed calls for her resignation, saying she was “absolutely determined to see through what I have promised”.
But announcing another U-turn, she said: “It is clear that parts of our mini-budget went further and faster than markets were expecting, so the way we are delivering our mission right now has to change.”
Mr Kwarteng’s plans to drop the planned rise in corporation tax from 19% to 25%, were therefore being scrapped, she announced, saving the Exchequer £18bn a year.
Is Jeremy Hunt now more powerful than the PM?
Jeremy Hunt has confirmed that Prime Minister Liz Truss’s economic vision is not only dead, but that the immediate actions of this administration will be to do almost exactly the opposite of what the prime minister promised during the summer leadership campaign.
This was a cold, hard reality check from a chancellor who is being upfront about the fact that his primary purpose is to put out the fires started by the government he’s just joined and restore some semblance of credibility to the UK economy.
Some taxes will rise, some will be cut more slowly than expected, and public spending will be trimmed with every department asked to find savings.
Does this mean pushing back the 2023 cut to the basic rate of income tax? Can the Ministry of Defence still expect its funding increase? Is there any chance of public sector pay rises reaching anywhere near inflation?
Politically, there is an argument to be made that Jeremy Hunt is now more powerful than the prime minister.
‘The last few weeks have been very tough’
Asked why he agreed to take on the difficult job of sorting out the public finances, the new chancellor said he wants to “do the right thing by the British people”.
But he added: “I want to be honest with people, we have some very difficult decisions ahead.
“The last few weeks have been very tough, but the context of that is coming out of a pandemic and a cost-of-living crisis.
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“No chancellor can control the markets, but what I can do is show that we can pay for our tax and spending plans and that is going to need some very difficult decisions.”
He said that all government departments would have to “find more efficiencies than they were planning to find”.
However, he declined to give any specific commitments ahead of the fiscal statement on October 31.
Asked if the NHS will still get the money that was promised in the health and social care levy, he said “the government’s already made that commitment”.
He added: “I’m not going to make any specific commitments about specific departments now, or indeed on the tax side about specific taxes because we have to look at these things in the round. And we have to make sure as we take these very difficult decisions, we’re honest with people about the situation we face.”
‘This is a disaster’
David Lammy, the shadow foreign secretary, questioned how cuts can be made given the pressure public services are under.
He said the market turmoil seen in recent weeks is a “crisis made in Number 10” and called for a general election.
He said: “As you listen to Jeremy Hunt what you hear is despite long queues in the NHS, it’s now set to get worse, despite rising class sizes in Britain we can expect our education to get worse, and with crime soaring across many communities in the country, we need police officers.
“Are they are now going to back-pedal on those undertakings that they’ve previously made?
“This is a disaster and the only way to deal with a disaster is a general election and to set our country on a certain path for the next five years.”
He claimed Ms Truss had “no mandate” for her policies.
“We cannot live in an oligarchy effectively where the Conservatives choose who leads them and as a consequence gives us a prime minister with no mandate at all to make, now, the swingeing cuts that we’re about to see.”
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Ukraine’s president is offering an olive branch to Donald Trump with a dramatic public message aimed at mending their relationship and ending Russia’s war.
Volodymyr Zelenskyy chose social media – the US leader’s favourite mode of communication – to make his point.
He did not go so far as to apologise for a fiery bust-up with Mr Trump at the Oval Office last Friday – a move that some members of the US administration have called for, even though it was the American president and his deputy JD Vance who laid into Mr Zelenskyy.
Instead, he described the encounter as “regrettable”, saying it “did not go the way it was supposed to be” and it was “time to make things right”.
Ukrainian forces fire a missile towards Russian troops near Chasiv Yar. Pic: Reuters
Most significantly though was his spelling out of a vision for the first stage of how Russia’s war with Ukraine could end.
Pushing back on false claims by Trump allies such as Elon Musk that Mr Zelenskyy wants an endless war, he said that Ukraine is committed to peace and is ready to come to the negotiating table as soon as possible.
Crucially, he said: “We are ready to work fast to end the war, and the first stages could be the release of prisoners and truce in the sky – ban on missiles, long-ranged drones, bombs on energy and other civilian infrastructure – and truce in the sea immediately, if Russia will do the same.”
Appealing to the US president’s ego, he praised Mr Trump’s “strong leadership” and repeated his gratitude for past American support – again responding to criticism from the American commander in chief and his team that he is not showing enough gratitude.
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He also said Kyiv was ready to sign a key minerals deal with Washington – something else Mr Trump is seeking.
This message appears to be an attempt by Mr Zelenskyy to steer his relationship with Mr Trump back on track and to map out his idea for an end to the war – a conflict that Ukraine did not seek but which was brought to its land by Russia’s invading forces.
Donald Trump and Volodymyr Zelenskyy at the White House on Friday, before their Oval Office bust-up. Pic: AP
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Key now will be how the US president responds.
Will Mr Zelenskyy’s expression of regret and clear wish to end the war provide enough of an off-ramp for Mr Trump to defuse the row and – for the sake of Ukraine’s ability to defend itself – switch back on the flow of military assistance to the country?
Another major factor, of course, is how Vladimir Putin reacts and whether he could countenance a limited ceasefire in a war that he started and – unlike Mr Zelenskyy – appears to have no genuine desire to halt.
Donald Trump’s 25% tariffs on goods from Mexico and Canada have come into effect, as has an additional 10% on Chinese products, bringing the total import tax to 20%.
The US president confirmed the tariffs in a speech at the White House – and his announcement sent US and European stocks down sharply.
The tariffs will be felt heavily by US companies which have factories in Canada and Mexico, such as carmakers.
Mr Trump said: “They’re going to have a tariff. So what they have to do is build their car plants, frankly, and other things in the United States, in which case they have no tariffs.”
There’s “no room left” for a deal that would see the tariffs shelved if fentanyl flowing into the US is curbed by its neighbours, he added.
Mexico and Canada face tariffs of 25%, with 10% for Canadian energy, the Trump administration confirmed.
And tariffs on Chinese imports have doubled, raising them from 10% to 20%.
Canada announced it would retaliate immediately, imposing 25% tariffs on US imports worth C$30bn (£16.3bn). It added the tariffs would be extended in 21 days to cover more US goods entering the country if the US did not lift its sanctions against Canada.
China also vowed to retaliate and reiterated its stance that the Trump administration was trying to “shift the blame” and
“bully” Beijing over fentanyl flows.
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What is America’s trade position?
Mr Trump’s speech stoked fears of a trade war in North America, prompting a financial market sell-off.
Stock market indexes the Dow Jones Industrial Average and the Nasdaq Composite fell by 1.48% and 2.64% respectively on Monday.
The share prices for automobile companies including General Motors, which has significant truck production in Mexico, Automaker and Ford also fell.
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Consumers in the US could see price hikes within days, an expert has said.
Gustavo Flores-Macias, a public policy professor at Cornell University, New York, said “the automobile sector, in particular, is likely to see considerable negative consequences”.
This is due to supply chains that “crisscross the three countries in the manufacturing process” and ” because of the expected increase in the price of vehicles, which can dampen demand,” he added.
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The Trump administration is gearing up to bring in other tariffs in the coming weeks.
On 2 April, reciprocal tariffs will take effect on all countries that impose duties on US products.
He is also considering 25% tariffs on goods from the EU “very soon” after claiming the bloc was created to “screw the United States”.
A truck has collided with a bus in southern Bolivia, killing at least 31 people, according to police – just two days after a deadly crash claimed at least 37 lives.
Officers said the bus rolled some 500m (1,640ft) down a ravine after the collision on Monday, which took place on the highway between Oruro, in the Bolivian Altiplano, and the highland mining city of Potosi.
The driver of the truck has been arrested, while the cause of the accident is under investigation.
Police spokesperson Limbert Choque said men and women were among the dead, and 22 people suffered injuries.
Rescue teams operating at the site of the crash. Pic: Bolivia’s attorney general/Reuters
Bolivia’s President, Luis Arce, expressed condolences for the victims on social media: “This unfortunate event must be investigated to establish responsibilities,” he said in a post on Facebook.
“We send our most sincere condolences to the bereaved families, wishing them the necessary strength to face these difficult times.”
The crash happened between Oruro and Potosi
On Saturday morning, a crash between two buses killed more than three dozen people in the same region.
It happened between Colchani and the city of Uyuni, a major tourist attraction and the world’s largest salt flat.
People stand near the wreckage of one of the two buses involved in a crash on Saturday. Pic: Reuters/Potosi Departmental Command
Coincidentally, one of the buses was heading to Oruro, where one of the most important carnival celebrations in Latin America is currently taking place.
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More than 30 people were also killed after a bus crash on 17 February.
In that crash, police said the driver appeared to have lost control of the vehicle, causing it to drop more than 800m (2,600ft) off a precipice in the southwestern area of Yocalla.
Bolivia’s mountainous, undermaintained and poorly supervised roads are some of the deadliest in the world, claiming an average 1,400 fatalities every year.
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