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Jeremy Hunt has revealed he is reversing “almost all” of the tax cuts announced in his predecessor’s mini-budget and is scaling back support for energy bills.

In an emergency statement, the chancellor said a 1p cut to income tax will be delayed “indefinitely” until the UK’s finances improve instead of being introduced in April 2023 as announced in Kwasi Kwarteng’s mini-budget three weeks ago.

Mr Hunt, who only stepped into the job on Friday, said the government’s energy price guarantee will only be universal until April – not for two years as originally planned.

After April, the scheme will be more targeted following a review into how to support people’s energy bills from that time, he said.

Hunt goes further than expected – as Tory MPs say it’s ‘when not if’ Truss goes – follow latest on politics

“The government has today decided to make further changes to the mini-budget, and to reduce unhelpful speculation about what they are, we’ve decided to announce these ahead of the medium-term fiscal plan, which happens in two weeks,” Mr Hunt said.

He said the government was reversing “almost all” the tax measures announced in the mini-budget that have not yet started going through parliament.

The Treasury said new tax measures would bring in £32bn after economists estimated the government was facing a £60bn black hole in public finances with the mini-budget announcements.

The changes Mr Hunt revealed include:

  • No cuts to dividend tax rates
  • Repeal of the easing of IR35 rules for the self-employed introduced in 2017 and 2021
  • No new VAT-free shopping scheme for overseas visitors to the UK
  • No freeze on alcohol duty rates
  • Basic rate of income tax to remain at 20%, not reduce to 19% from April 2023
  • Energy price guarantee only until April 2023.

‘A new approach’

Mr Hunt promised: “The objective is to design a new approach that will cost the taxpayer significantly less than planned, whilst ensuring enough support for those in need.

“Any support for businesses will be targeted to those most affected, and the new approach will better incentivise energy efficiency.

“The most important objective for our country right now is stability.”

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As Mr Hunt revealed the tax cut reversals, the pound strengthened by more than 1.2% to 1.139 against the US dollar and UK government bonds rallied further, with yields on 30-year gilts easing back by around 10%.

Widely seen as the most powerful person in government now, Mr Hunt added that there will be “more difficult decisions” on tax and spending” and said all government departments “will need to redouble their efforts to find savings, and some areas of spending will need to be cut”.

The mini-budget tax cuts that will not be reversed, as they are already going through parliament, are: reversing the increase in national insurance contributions and the stamp duty cut.

Ms Truss’ spokesman said Monday’s decision was taken jointly by the PM and Mr Hunt over the weekend and again admitted the mini-budget went “too far, too fast”.

But he sidestepped questions about whether Ms Truss would resign after another Tory, Angela Richardson, joined those who started publicly calling for her to go over the weekend.

‘Genuinely shocking’

Sky News’ political editor Beth Rigby said this row back on the mini-budget is a major blow for Liz Truss, just six weeks into her premiership.

“The entire platform of the Truss administration is gone, is gone. It’s done,” she said.

“It’s genuinely shocking in terms of how a prime minister and her cabinet got this so wrong and had to reverse in such a dramatic way.”

“It’s not just the tax decisions in the mini-budget that the new chancellor now says are just not viable.

“He’s now saying that the policy platform, her big shock and awe announcement as it was billed in the run-up to that announcement is also just economic, not viable. And that is another body blow to the prime minister today.”

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‘We think she should go’ – Labour

‘Still flying blind’

Scottish First Minister Nicola Sturgeon used a news conference about Scottish independence shortly after Mr Hunt’s statement to say the government turmoil is “a self-inflicted crisis for Liz Truss” and “is humiliating in quite an unprecedented way”.

“I think the sooner this prime minister and this entire government departs office, the better that will be for everyone,” she added.

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Christmas food price shock looms, chancellor warned

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Christmas food price shock looms, chancellor warned

Food inflation will rise to 6% by the end of the year – posing a “significant challenge” to household budgets in the run-up to Christmas, industry leaders have predicted.

The British Retail Consortium is warning that the chancellor risks “fanning the flames of inflation” if she hikes taxes in the coming budget.

Despite intense price competition between supermarket chains, the BRC has sounded the alarm over the pace of grocery price hikes.

As of this month, food inflation has risen 4% year on year – its highest level since February 2024.

The BRC said this increase is linked to global factors, such as high demand and crop struggles.

Beef, chicken and tea prices are among those that have risen the most this year – but some of the blame is being laid squarely at the chancellor’s door too.

The BRC said it was inevitable that a £7bn burden, through changes to employers’ national insurance contributions and minimum pay rules after last October’s budget, had been partly passed on to customers in the form of higher prices.

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Will we see tax rises in next budget?

It published the results of a survey of retail industry finance chiefs to illustrate its point – that nerves about what Ms Reeves’s second budget could bring were not helping companies invest in either new employment or prices.

Business was promised it would be spared additional pain after it was put on the hook for the bulk of the chancellor’s tax-raising measures last year.

However, speculation is now rife over who will feel the pain this autumn as she juggles a deterioration in the public finances.

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Options for wealth tax

A widening black hole is estimated at around £20bn.

The cost of servicing government debt has risen since the last budget, while U-turns on welfare reforms and winter fuel payment cuts have made her job even harder – making further tax-raising measures inevitable.

The survey of chief financial officers for the BRC showed the biggest current fear ahead was for the “tax and regulatory burden”.

Two-thirds of the CFOs predicted further price rises in the coming year, at a time when the headline rate inflation already remains stuck way above the Bank of England’s target of 2%.

It currently stands at 3.6%.

Helen Dickinson, chief executive of the BRC, said: “Retail was squarely in the firing line of the last budget, with the industry hit by £7bn in new costs and taxes.

“Retailers have done everything they can to shield their customers from higher costs, but given their slim margins and the rising cost of employing staff, price rises were inevitable.

“The consequences are now being felt by households as many struggle to cope with the rising cost of their weekly shop.

“It is up to the chancellor to decide whether to fan the flames of inflation, or to support the everyday economy by backing the high street and the local jobs they provide.”

She concluded: “Retail accounts for 5% of the economy yet currently pays 7.4% of business taxes and a whopping 21% of all business rates.

“It is vital the upcoming reforms offer a meaningful reduction in retailers’ rates bill, and ensures no store pays more as a result of the changes.”

The Treasury has been approached for comment.

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US Federal Reserve defies calls from Donald Trump to cut interest rate

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US Federal Reserve defies calls from Donald Trump to cut interest rate

The Federal Reserve has defied calls from US President Donald Trump for a cut to the interest rate by leaving it unchanged.

The decision means it has an effective rate of 4.3%, where it has remained after the central bank, known as the Fed, reduced it three times last year.

“We’re keeping the rates high, and it’s hurting people from buying houses,” Mr Trump told reporters. “All because of the Fed.”

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Mr Trump has repeatedly been asked whether he would fire Fed chair Jerome Powell if he failed to heed his demand to cut the rate.

In June, the US president labelled Mr Powell a “stupid person” after the Fed decided not to change rates. Then less than two weeks later, in a further attack, he said the Fed’s chair should “ashamed” and would “love” him to resign.

The US president has spent months verbally attacking Mr Powell.

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Fed chair has ‘done a bad job’, says Trump

There were clear tensions between the pair last Thursday as they toured the Federal Reserve in Washington DC, which is undergoing renovations.

When taking questions, Mr Trump said: “I’d love him to lower interest rates,” then laughed and slapped Powell’s arm.

Donald Trump and Federal Reserve Chair Jerome Powell
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There were clear tensions between the US President and Mr Powell during last week’s visit to the Federal Reserve. Pic: Reuters

The US president also challenged him, in front of reporters, about an alleged overspend on the renovations and produced paperwork to prove his point. Mr Powell shook his head as Trump made the claim.

When Mr Trump was asked what he would do as a real estate mogul if this happened to one of his projects, he said he’d fire his project manager – seemingly in reference to Mr Powell.

Donald Trump challenges Federal Reserve Chair Jerome Powell about the cost of renovations
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Donald Trump challenged Mr Powell in front of reporters. Pic: Reuters

Unlike the UK, the US interest rate is a range to guide lenders rather than a single percentage.

The Fed has expressed concern about the impact of Mr Trump’s signature economic policy of implementing new tariffs, taxes on imports to the US.

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Trump’s tariffs: What you need to know

On Wednesday, the president said he was still negotiating with India on trade after announcing the US will impose a 25% tariff on goods imported from the country from Friday.

Mr Trump also signed an executive order on Wednesday implementing an additional 40% tariff on Brazil, bringing the total tariff amount to 50%, excluding certain products, including oil and precious metals.

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The committee which sets rates voted 9 to 2 to keep the benchmark rate steady, the two dissenters were appointees of President Trump who believe monetary policy is too tight.

In a policy statement to explain their decision, the Federal Reserve said that “uncertainty about the economic outlook remains elevated” but growth “moderated in the first half of the year,” possibly bolstering the case to lower rates at a future meeting.

Nathan Thooft, chief investment officer at Manulife Investment Management, described the rate decision as a “kind of a nothing burger” and it was “widely expected”.

Tony Welch, chief investment officer at SignatureFD, agreed that it was “broadly as expected”. He added: “That explains why you’re not seeing a lot of movement in the market right now because there’s nothing that’s surprising.”

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Apollo charges in for stake in £7bn petrol retailer Motor Fuel Group

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Apollo charges in for stake in £7bn petrol retailer Motor Fuel Group

The investment giant Apollo Global Management is close to snapping up a stake in Motor Fuel Group (MFG), one of Britain’s biggest petrol forecourt empires, in a deal valuing it about £7bn.

Sky News has learnt that Apollo could announce as soon as Thursday that it has agreed to buy a large minority stake in MFG from Clayton Dubilier & Rice (CD&R), its current majority-owner.

The transaction will come after several months of talks involving CD&R and a range of prospective investors in a company which is rapidly expanding its presence in the electric vehicle charging infrastructure arena.

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Banking sources said there had been a “large appetite” to invest in the next phase of MFG’s growth, with CD&R having built the company from a mid-sized industry player over the course of more than a decade.

Lazard and Royal Bank of Canada are understood to be advising on the deal.

A stake of roughly 25-30% in MFG has been expected to change hands during the process, with Apollo’s investment said to be broadly in that range.

MFG is the largest independent forecourt operator in the UK, having grown from 360 sites at the point of CD&R’s acquisition of the company.

It trades under a number of brands, including Esso and Shell.

CD&R, which also owns the supermarket chain Morrisons, united MFG’s petrol forecourt businesses with that of the grocer in a £2.5bn transaction, which completed nearly 18 months ago.

MFG now comprises roughly 1,200 sites across Britain, with earnings before interest, tax, depreciation and amortisation (EBITDA) of about £700m anticipated in this financial year.

It is now focused on its role in the energy transition, with hundreds of electric vehicle charging points installed across its network, and growing its high-margin foodservice offering.

MFG has outlined plans to invest £400m in EV charging, and is now the second-largest ultra-rapid player in the UK – which delivers 100 miles of range in ten minutes – with close to 1,000 chargers.

It aims to grow that figure to 3,000 by 2030.

CD&R, which declined to comment on Wednesday afternoon, will retain a controlling stake in MFG after any stake sale, while Morrisons also holds a 20% interest in the company.

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Bankers expect that the minority deal with Apollo will be followed a couple of years later with an initial public offering on the London stock market.

CD&R invested in MFG in 2015, making its investment a long-term one by the standards of most private equity holding periods.

The sale of a large minority stake at a £7bn enterprise valuation will crystallise a positive return for the US-based buyout firm.

CD&R and its investors have already been paid hundreds of millions of pounds in dividends from MFG, having seen its earnings grow 14-fold since the original purchase.

Morrisons’ rival, Asda, has undertaken a similar transaction with its petrol forecourts, with EG Group acquiring the Leeds-based grocer’s forecourt network.

EG Group, which along with Asda is controlled by private equity firm TDR Capital, is now being prepared for a listing in the US.

Apollo declined to comment.

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