Jeremy Hunt has admitted the government went “too far, too fast” and that he will have to take some “very difficult decisions” on spending and tax to get the economy back up and running.
Earlier, the new chancellor admitted there “were mistakes” in Liz Truss and Kwasi Kwarteng’s mini-budget in an interview with Sky News.
But in an apparent bid to restore trust in the government’s handling of the economy, Mr Hunt released a statement on Saturday night saying his focus is on “growth underpinned by stability”.
“The drive on growing the economy is right – it means more people can get good jobs, new businesses can thrive and we can secure world-class public services. But we went too far, too fast,” he said.
He appeared to warn the public it won’t be an easy road, saying the government has to “be honest with people”.
“We are going to have to take some very difficult decisions both on spending and on tax to get debt falling but the top of our minds when making these decisions will be how to protect and help struggling families, businesses and people,” he said.
“I will set out clear and robust plans to make sure government spending is as efficient as possible, ensure taxpayer money is well spent and that we have rigorous control over our public finances.”
Mr Hunt was appointed as the new chancellor on Friday, following Mr Kwarteng’s sacking after just 38 days in the job.
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Can Jeremy Hunt save Liz Truss?
While some Tory MPs welcomed the new appointment 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.
Meanwhile, the Sunday Times is reporting that Mr Hunt will delay a planned 1p reduction to the basic rate of income tax by one year after the country’s fiscal watchdog warned that the public finances were in a worse state than expected.
Soaring interest rates
It comes as the Bank of England (BoE) said interest rates will have to be raised higher than initially hoped in the face of inflationary pressure.
In August, the Bank said it expected the rate of inflation to peak at 13% this year – and remain above 10% for a few months before falling.
But now, BoE governor Andrew Bailey says the realities of inflation might require a stronger interest rates response from the central bank.
Jeremy Hunt and Andrew Bailey. Pic: HM Treasury
Mr Bailey said he spoke to Mr Hunt on Friday and had a “meeting of minds” on the issue of “fiscal sustainability”.
Taking questions in Washington, he said: “I can tell you that I spoke to Jeremy Hunt, the new chancellor, yesterday. I can tell you that there was a very clear and immediate meeting of minds between us about the importance of fiscal sustainability and the importance of taking measures to do that.”
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He continued: “It’s not appropriate for me to constrain the choices he makes but the very clear message I would give and it is a clear message for everybody, including a clear message for markets.
“I can tell you there is a very clear and immediate meeting of minds on the importance of stability and sustainability.”
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Can Jeremy Hunt save Liz Truss?
‘Mistakes’ in mini-budget
Reflecting on the government’s recent mini-budget, Mr Hunt told Sky News that “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”.
He added that it was also 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.”
World
Asianmarkets bounce back after Trump pauses higher tariffs for most countries – despite increasing those on China to 125%
Asian markets have reacted positively after Donald Trump paused his so-called “reciprocal” tariffs on most of America’s trading partners for 90 days, despite the US president increasing those on China to 125%.
There have been fears of a global recession and stock markets around the world had plummeted after Mr Trump announced his “Liberation Day” tariffs on Wednesday 2 April.
However, Japan’s Nikkei share average was up 8.2% by 3.50am BST, while the broader Topix had risen 7.5%.
Similarly, the S&P 500 stock index had jumped 9.5% and global markets bounced back following Mr Trump’s announcement on Wednesday that the increased tariffs on nearly all trading partners would now be paused.
Tariffs latest: Trump gives reasons for pausing some tariffs
In a post on his Truth Social platform, Mr Trump said the “90-day pause” was for the “more than 75 countries” who had not retaliated against his tariffs “in any way”.
He added that during this period they would still have to pay a “substantially lowered” 10% tariff, which is “effective immediately”.
It is lower than the 20% tariff that Mr Trump had set for goods from the European Union, 24% on imports from Japan and 25% on products from South Korea.
The UK was already going to face a blanket 10% tariff under the new system.
Mr Trump said the increased 125% tariff on imported goods from China was “effective immediately”.
He added: “At some point, hopefully in the near future, China will realise that the days of ripping off the USA, and other countries, is no longer sustainable or acceptable.”
Hours after Mr Trump announced the pause on tariffs for most countries, a White House official clarified that this did not apply to the 25% duties imposed on some US imports from Mexico and Canada.
The tariffs were first announced in February and Mexico and Canada were not included in the “Liberation Day” announcements.
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Donald Trump says China ‘wants to make a deal’
Hours before the 125% tariff on China was revealed, Beijing said it was increasing tariffs on US goods by 50%.
It meant tariffs of 84% would be enforced on US goods – up from the 34% China had previously planned.
Mr Trump spoke to reporters in the Oval Office. Pic: Reuters
China ‘want to make a deal’
Asked why he posted “BE COOL” on Truth Social hours before announcing his tariff pause, Mr Trump told reporters at the White House: “I thought that people were jumping a little bit out of line.”
“They were getting yippy, you know, were getting a little bit yippy, a little bit afraid,” he added.
Mr Trump continued: “China wants to make a deal, they just don’t know how to go about it.
“[They’re] quite the proud people, and President Xi is a proud man. I know him very well, and they don’t know quite how to go about it, but they’ll figure it out.
“They’re in the process of figuring out, but they want to make a deal.”
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White House press secretary Karoline Leavitt said the walk back was part of a grand negotiating strategy by Mr Trump.
“President Trump created maximum negotiating leverage for himself,” she said, adding that the news media “clearly failed to see what President Trump is doing here”.
US Treasury Secretary Scott Bessent also insisted Mr Trump had strengthened his hand through his tariffs.
“President Trump created maximum negotiating leverage for himself,” he said.
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Mr Bessent said Mr Trump decided to raise tariffs on China because Beijing hadn’t reached out to the US and instead increased its own levies on US goods.
Downing Street said that the UK will “coolly and calmly” continue its negotiations with the US.
A Number 10 spokeswoman said: “A trade war is in nobody’s interests. We don’t want any tariffs at all, so for jobs and livelihoods across the UK, we will coolly and calmly continue to negotiate in Britain’s interests.”
Along the thin strip of beach and woodland known as the Vistula Spit which marks the northernmost demarcation between Poland and the Russian exclave of Kaliningrad, there is not much in the way of a border.
Just some torn wire fencing and a few rotten posts which seem to stagger drunkenly into the shallows of the Baltic Sea.
Beneath a sign barring entry, we find a couple of empty bottles of Russian cognac and vodka.
It doesn’t feel like the edge of NATO territory.
This doesn’t feel like the edge of NATO territory
“I don’t see much protection. It’s not good,” says Krzysztof from Katowice, who has come to inspect the border himself.
“We have to have some kind of scare tactic, something to show that we are trying to strengthen our army,” says Grzegorz, who lives nearby.
“At the same time I think I would not base the defence of our country solely on our army. I am convinced that Europe or America, if anything were to happen, will help us 100%.”
Poland is investing massively in its defence, with military spending set to hit 4.7% of GDP in 2025, more than any other NATO country.
Polish Prime Minister Donald Tusk has said he will introduce voluntary military training for men of any age, and women too should they wish, so the army has a competent reserve force in the event of war.
Border between EU and the Russian Federation
He is investing $2.5bn in stronger border fortifications between Russia and Belarus, a project called East Shield which will include anti-tank obstacles, bunkers and potentially minefields too.
Along with its Baltic neighbours, Poland is withdrawing from the Ottawa convention against the use of land mines. It hasn’t committed to using them, but it wants to have that option.
We’ve been granted access to one of the cornerstones of Polish, and European defence, which is a couple of hours drive from the Vistula spit at the Redowicze military base.
Aegis Ashore Poland
Aegis Ashore Poland, together with its sister site in Romania, are the land-based arms of NATO’s missile defence shield over Europe, which is run by the US navy.
They are symbols of the US commitment to NATO and to the protection of Europe.
The control room at Aegis Ashore Poland
And despite changes at the top of the Pentagon it is “business as usual”, says Captain Michael Dwan who oversees air and missile defence within the US Sixth Fleet.
“Our mission to work with NATO forces has been unchanged. And so our commitment from the United States perspective and what capability we bring to ballistic missile defence and the defence of NATO is championed here in Poland.”
The control room at Aegis Ashore Poland
As far as Russia is concerned, NATO’s two missile defence bases in Romania and Poland represent a NATO threat on their doorstep and are therefore a “priority target for potential neutralisation”, per Russia’s foreign ministry.
NATO says the installations are purely defensive and their SM-3 interceptor missiles are not armed and are not intended to carry warheads. Russia counters they could easily be adapted to threaten Russia.
Not the case, Captain Dwan says.
Aegis Ashore Poland
Aegis Ashore Poland
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“It’s not a matter of moving offensive weapons here into the facility, the hardware and the infrastructure is simply not installed.
“It would take months or years to change the mission of this site and a significant amount of money and capability and design.”
With so much marked “secret” on the site, it seems amazing to be granted the access.
But for NATO, transparency is part of deterrence. They want potential adversaries to know how sophisticated their radar and interception systems are.
They know that if they carried warheads on site, that would make them a target so they don’t.
Deterrence also depends on whether potential adversaries believe in the US’s commitment to NATO and to Europe’s defence.
On an operational level, as far as the troops are concerned, that commitment may still be iron-clad.
But as far as its commander-in-chief goes, there is still – as with so much around Donald Trump’s presidency – a great deal of uncertainty.
In the Oval Office on Wednesday afternoon President Trump suggested he might bundle a potential US troop drawdown in Europe together with the issue of EU trade and tariffs.
“Nice to wrap it up in one package,” he said, “it’s nice and clean”.
Probably not the way Europe sees it, not with a resurgent Russia on their doorstep, economic tailwinds breeding animosity and the notion of Pax Americana crumbling at their feet.
The defence secretary will urge “coalition of the willing” nations to increase pressure on Russia to end its war in Ukraine as plans to support peace ramp up.
John Healey and French defence minister Sebastien Lecornu will lead about 30 defence ministers in Brussels on Thursday as they discuss operational plans for a multinational peacekeeping force in Ukraine as part of the “coalition of the willing”.
They will look at each nation’s capabilities and how they could be best used to support Ukraine’s long-term defence and security as part of what the Ministry of Defence called a “reassurance force”.
UK and French military chiefs discussed planning with Ukrainian President Volodymyr Zelenskyy and his military chiefs in Kyiv last weekend.
Peace negotiations are ongoing between the US and Russia, however, US officials appear to be growing increasingly impatient with the lack of progress after Donald Trump publicly suggested a month ago Vladimir Putin wants to end the war.
Read more: Who’s in and who’s out of the coalition of the willing?
Leaders of nations part of the coalition of the willing at a summit in Paris on 27 March. Pic: AP
Last Tuesday, the Kremlin described the latest US peace proposal as unacceptable in its current form because it does not solve the “root causes” of the conflict.
Mr Putin wants to dismantle Ukraine as an independent, functioning state and has demanded Kyiv recognise Moscow’s annexation of Crimea and other partly occupied areas and pull its forces out, as well as a pledge for Ukraine to never join NATO and to demilitarise.
Secretary of State Marco Rubio said on Friday Mr Trump is not “going to fall into the trap of endless negotiations” with Moscow.
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Zelenskyy makes dig at US over response to Russian attack
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Children killed in Russian missile strike
Despite the apparent impasse in talks, the coalition of the willing – which does not include the US – is continuing with its plans for when peace is agreed.
Mr Healey is expected to tell his fellow defence ministers: “We cannot jeopardise the peace by forgetting about the war, so we must put even more pressure on Putin and step up our support for Ukraine – both in today’s fight and the push for peace.
“Our commitment is to put Ukraine in the strongest position to protect Ukraine’s sovereignty and deter future Russian aggression.”
On Friday, the defence secretary and his German counterpart, Boris Pistorius, will chair the 27th meeting of the Ukraine Defence Contact Group at NATO’s headquarters in Brussels.
The group is an alliance of about 50 countries – all 32 NATO member states, including the US, and about 20 other countries – that has been supporting Ukraine by sending military equipment since Russia invaded in April 2022.
A Ukraine Defence Contact Group meeting – including the US defence secretary – in March. Pic: AP
Mr Healey and Mr Pistorius will “drive forward additional military support” as Russia continues to attack Ukraine.
The latest development in the war has seen Mr Zelenskyy say Ukraine has intelligence there are at least 155 Chinese citizens fighting for the Russian military.
On Tuesday, Mr Zelenskyy released a video of a Chinese soldier taken by Ukrainian forces, with another captured by Ukrainian forces, he said.
Chinese foreign ministry spokesperson Lin Jian denied claims there were “many more” Chinese citizens fighting alongside Russians in Ukraine.
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