New UK Finance Minister Jeremy Hunt named as Liz Truss prepares to take office U-turn

• Jeremy Hunt, a former Cabinet member, was named by Liz Truss to the position.
• He succeeds Kwasi Kwarteng, whose “mini-budget” that lowered taxes was announced just three weeks ago.
• The move could see her replaced by Rishi Sunak and Penny Mordaunt, her main opponents in the leadership race.

On Thursday, the pound increased against the dollar by as much as 1.7%, while bond markets stabilised on speculation that Truss might change the economic growth strategy.

As the fourth Treasury chief in the United Kingdom this year, Truss selected former Cabinet minister Jeremy Hunt to the position.
Jeremy Hunt, a former Cabinet member, was named by Truss to the position, making him the fourth Treasury chief in the UK this year.

Liz Truss, the embattled British prime minister, installed a new Treasury chief ahead of a hurriedly scheduled news conference on Friday as she tried to maintain her position and calm the markets after the presentation of a divisive economic plan.

As the fourth Treasury chief in the United Kingdom this year, Truss selected former Cabinet minister Jeremy Hunt to the position. He succeeds Kwasi Kwarteng, whose “mini budget” that lowered taxes was announced just three weeks ago and caused the pound to drop to historic lows versus the dollar.

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Kwarteng tweeted his departure letter to Truss, and defended the government’s economic plan, saying that the country faces an “incredibly difficult” situation and “following the status quo was not an option.”

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But because investors already believed that the administration would abandon several of its big promises, there was little market reaction to his resignation.

Hunt is a seasoned government official who has held the positions of health and foreign secretaries. He unsuccessfully sought the Conservative Party’s leadership in 2019, but he is well-liked and might provide Truss with stability as she works to strengthen her support base.

Later on Friday, Truss is scheduled to conduct a news conference. She is under great pressure to reverse some of the unfunded tax cuts totaling £43 billion ($48 billion) that shook the financial markets and prompted the Bank of England to intervene to save a broader economic crisis.

Senior Conservative Party figures were publicly urging the administration to act. On Thursday, the pound increased against the dollar by as much as 1.7%, while bond markets stabilised on speculation that Truss might change the economic growth strategy.

Free-market libertarian Truss took office last month and campaigned on a platform of tax cuts to boost the economy. Her capacity to fulfil that promise, however, is now in question.

Analysts believe that abandoning a pledge to block her predecessor’s proposal to raise corporation tax from 19% to 25% would be the most likely alteration to her programme. That would save her programme almost 18 billion pounds a year in expenses.

The government “is about to U-turn on its choice not to U-turn on its reckless tax-cutting measures,” according to James Athey, the investment director at abrdn. The market volatility is decreasing, he claimed.

“The risk now is that investors have forgotten that there are significantly more problems than just an ill-advised and ill-timed fiscal easing to deal with,″ he said. “Inflation is at multi-decade highs, government borrowing is huge as is the current account deficit. The housing market is likely to suffer a hammer blow from the jump in mortgage rates and the war in Ukraine rumbles on. We may well be through the worst of the volatility but I fear that the U.K. is nowhere near out of the woods.”

Conservative legislators are torn between trying to remove their second leader this year and doing nothing. Boris Johnson was forced to resign in July, and Truss was chosen to take his position. Although it’s unclear how that could be done, some reports claim senior Conservatives are planning to replace Truss with an united ticket of Rishi Sunak and Penny Mordaunt, her two main opponents in the summer leadership race.

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