September 2022 United Kingdom Mini-budget
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On 23 September 2022, the
Chancellor of the Exchequer The chancellor of the Exchequer, often abbreviated to chancellor, is a senior minister of the Crown within the Government of the United Kingdom, and head of His Majesty's Treasury. As one of the four Great Offices of State, the Chancellor is ...
,
Kwasi Kwarteng Akwasi Addo Alfred Kwarteng (born 26 May 1975) is a British Conservative Party politician who has been the Member of Parliament (MP) for Spelthorne in northern Surrey since May 2010. He was Secretary of State for Business, Energy and Industria ...
, delivered a Ministerial Statement entitled "The Growth Plan" to the
House of Commons of the United Kingdom The House of Commons is the lower house of the Parliament of the United Kingdom. Like the upper house, the House of Lords, it meets in the Palace of Westminster in London, England. The House of Commons is an elected body consisting of 650 me ...
. Widely referred to in the media as a mini-budget (not being an official
budget A budget is a calculation play, usually but not always financial, for a defined period, often one year or a month. A budget may include anticipated sales volumes and revenues, resource quantities including time, costs and expenses, environmenta ...
statement), it contained a set of economic policies and
tax cuts A tax cut represents a decrease in the amount of money taken from taxpayers to go towards government revenue. Tax cuts decrease the revenue of the government and increase the disposable income of taxpayers. Tax cuts usually refer to reductions in ...
such as bringing forward the planned cut in the basic rate of
income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...
from 20% to 19%; the abolition of the 45% higher rate of income tax in England, Wales and Northern Ireland; reversing a plan announced in March 2021 to increase corporation tax from 19% to 25% from April 2023; the reversal of the April 2022 increase in
National Insurance National Insurance (NI) is a fundamental component of the welfare state in the United Kingdom. It acts as a form of social security, since payment of NI contributions establishes entitlement to certain state benefits for workers and their famil ...
; and the abolition of the proposed
Health and Social Care Levy The Health and Social Care Levy was a proposed tax in the United Kingdom to be levied by the Government of the United Kingdom for extra health spending, expected to be launched in 2023. Provision for the tax is given under the Health and Social ...
. Following widespread negative response to the mini-budget, the planned abolition of the 45% tax rate was reversed 10 days later, while plans to cancel an increase in corporation tax were reversed 21 days later. The mini-budget was delivered against the backdrop of a cost of living crisis and was immediately followed by a sharp fall in the value of
pound sterling Sterling (abbreviation: stg; Other spelling styles, such as STG and Stg, are also seen. ISO code: GBP) is the currency of the United Kingdom and nine of its associated territories. The pound ( sign: £) is the main unit of sterling, and t ...
against the
US dollar The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
as world markets reacted negatively to the increased borrowing required. They also appeared to be concerned that no independent forecast by the
Office for Budget Responsibility The Office for Budget Responsibility (OBR) is a non-departmental public body funded by the UK Treasury, that the UK government established to provide independent economic forecasts and independent analysis of the public finances. It was formally ...
(OBR) had been seen. By the next day of trading, the pound had hit an all-time low against the US dollar. The mini-budget drew widespread criticism from economists, some of whom feared its reliance on increased government borrowing to pay for the largest tax cuts in 50 years could lead to a situation like the
1976 sterling crisis The 1976 sterling crisis was a currency crisis in the United Kingdom. Inflation (at close to 25% in 1975, causing high bond yields and borrowing costs), a balance of payments deficit, a public spending deficit, and the 1973 oil crisis were co ...
when the UK was forced to ask the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
(IMF) for a financial bailout. The IMF took the unusual step of issuing an openly critical response to the budget, saying it would "likely increase inequality". It urged the UK government to "re-evaluate" the proposed tax cuts.
HM Treasury His Majesty's Treasury (HM Treasury), occasionally referred to as the Exchequer, or more informally the Treasury, is a department of His Majesty's Government responsible for developing and executing the government's public finance policy and ec ...
announced plans to outline how the proposals would be costed in November, later brought forward to 31 October, alongside an independent forecast from the OBR. Despite continued market turbulence, and calls from
Members of Parliament A member of parliament (MP) is the representative in parliament of the people who live in their electoral district. In many countries with bicameral parliaments, this term refers only to members of the lower house since upper house members of ...
(MPs) including members of the
Conservative Party The Conservative Party is a name used by many political parties around the world. These political parties are generally right-wing though their exact ideologies can range from center-right to far-right. Political parties called The Conservative P ...
for a policy reversal, Prime Minister
Liz Truss Mary Elizabeth Truss (born 26 July 1975) is a British politician who briefly served as Prime Minister of the United Kingdom and Leader of the Conservative Party from September to October 2022. On her fiftieth day in office, she stepped down ...
and Kwarteng maintained the proposals outlined in the mini-budget would go ahead. Speculation began to mount about Truss's future as prime minister, and on 14 October she summoned Kwarteng back to the UK from a meeting of finance ministers in
Washington D.C. ) , image_skyline = , image_caption = Clockwise from top left: the Washington Monument and Lincoln Memorial on the National Mall, United States Capitol, Logan Circle, Jefferson Memorial, White House, Adams Morgan, Na ...
and asked for his resignation. Truss then appointed
Jeremy Hunt Jeremy Richard Streynsham Hunt (born 1 November 1966) is a British politician who has served as Chancellor of the Exchequer since 14 October 2022. He previously served in the Cabinet as Secretary of State for Culture, Olympics, Media and Sport ...
to replace him. Hunt subsequently reversed the majority of the tax cuts that had been outlined in the mini-budget, a decision that led to a positive market reaction. Following Truss’s resignation on 25 October, her successor
Rishi Sunak Rishi Sunak (; born 12 May 1980) is a British politician who has served as Prime Minister of the United Kingdom and Leader of the Conservative Party (UK), Leader of the Conservative Party since October 2022. He previously held two Cabinet of ...
retained Hunt as Chancellor. The 31 October statement was moved to 17 November in order to base it on the "most accurate possible" economic forecasts, and was also upgraded to a full autumn statement. Initial reaction to the mini-budget was mixed. The ''
Daily Mail The ''Daily Mail'' is a British daily middle-market tabloid newspaper and news websitePeter Wilb"Paul Dacre of the Daily Mail: The man who hates liberal Britain", ''New Statesman'', 19 December 2013 (online version: 2 January 2014) publish ...
'' called it "A true Tory budget", while
Frances O'Grady Frances Lorraine Maria O'Grady, Baroness O'Grady of Upper Holloway (born 9 November 1959) became the General Secretary of the British Trades Union Congress (TUC) in 2013, the first woman to hold the position. After O'Grady presented her resignat ...
, the
General Secretary of the Trades Union Congress The General Secretary of the TUC is the chief permanent officer of the Trades Union Congress, and a major figurehead in the trade union movement in the United Kingdom. The Secretary is responsible for the effective operation of the TUC and for lead ...
, branded it as "
Robin Hood Robin Hood is a legendary heroic outlaw originally depicted in English folklore and subsequently featured in literature and film. According to legend, he was a highly skilled archer and swordsman. In some versions of the legend, he is depic ...
in reverse".
Faisal Islam Faisal Islam ( bn, ফয়সাল ইসলাম; born 29 May 1977) is a British political and economics journalist who is the economics editor of BBC News and the occasional presenter of ''Newsnight''. He was the political editor of Sky N ...
, the
BBC #REDIRECT BBC #REDIRECT BBC Here i going to introduce about the best teacher of my life b BALAJI sir. He is the precious gift that I got befor 2yrs . How has helped and thought all the concept and made my success in the 10th board exam. ...
...
's economics editor, described the mini-budget's reversal as "the biggest
U-turn A U-turn in driving refers to performing a 180° rotation to reverse the direction of travel. It is called a "U-turn" because the maneuver looks like the letter U. In some areas, the maneuver is illegal, while in others, it is treated as a m ...
in British economic history". William Keegan, the former economics editor of ''
The Observer ''The Observer'' is a British newspaper published on Sundays. It is a sister paper to ''The Guardian'' and ''The Guardian Weekly'', whose parent company Guardian Media Group Limited acquired it in 1993. First published in 1791, it is the w ...
'', wrote that the plans outlined in the statement had shown a "misunderstanding" of
Thatcherism Thatcherism is a form of British conservative ideology named after Conservative Party leader Margaret Thatcher that relates to not just her political platform and particular policies but also her personal character and general style of manag ...
and its attitude towards taxation.


Background

The mini-budget took place against the backdrop of a cost of living crisis with inflation at high levels, and energy costs in particular rising sharply. During the
Conservative Party The Conservative Party is a name used by many political parties around the world. These political parties are generally right-wing though their exact ideologies can range from center-right to far-right. Political parties called The Conservative P ...
leadership election held between July and September 2022,
Liz Truss Mary Elizabeth Truss (born 26 July 1975) is a British politician who briefly served as Prime Minister of the United Kingdom and Leader of the Conservative Party from September to October 2022. On her fiftieth day in office, she stepped down ...
advocated for an emergency budget implementing significant reductions in taxation and adoption of radical free market policies, as previously outlined in ''Britannia Unchained'', a political thesis released in 2012, which was advocated by right-leaning
think tank A think tank, or policy institute, is a research institute that performs research and advocacy concerning topics such as social policy, political strategy, economics, military, technology, and culture. Most think tanks are non-governmenta ...
s, particularly those based at
55 Tufton Street 55 Tufton Street is a four-storey Georgian-era townhouse on historic Tufton Street, in Westminster, London, owned by businessman Richard Smith. Since the 2010s the building has hosted a network of libertarian lobby groups and think tanks rela ...
. Despite warnings against the viability of such policies by her rival
Rishi Sunak Rishi Sunak (; born 12 May 1980) is a British politician who has served as Prime Minister of the United Kingdom and Leader of the Conservative Party (UK), Leader of the Conservative Party since October 2022. He previously held two Cabinet of ...
and political commentators, Truss won the leadership election and became Prime Minister in September 2022. Truss subsequently appointed ''Britannia Unchained'' co-author
Kwasi Kwarteng Akwasi Addo Alfred Kwarteng (born 26 May 1975) is a British Conservative Party politician who has been the Member of Parliament (MP) for Spelthorne in northern Surrey since May 2010. He was Secretary of State for Business, Energy and Industria ...
, as Chancellor of the Exchequer. On 15 September 2022, it was reported that Kwarteng was planning to announce an emergency budget on 23 September. At the time, Parliament was in recess following the
death and state funeral of Elizabeth II On 8 September 2022, at 15:10 BST, Elizabeth II, Queen of the United Kingdom and the other Commonwealth realms, and the longest-reigning British monarch, died of old age at Balmoral Castle in Scotland, at the age of 96. The Queen's death ...
and government business was suspended until after the funeral. On 21 September, ahead of the budget, and having previously announced plans to cap the price of household energy bills for two years, the UK government announced a scheme that would freeze wholesale gas and electricity prices for businesses for six months from 1 October. This was followed the next day with the announcement that a 1.25% rise in
National Insurance National Insurance (NI) is a fundamental component of the welfare state in the United Kingdom. It acts as a form of social security, since payment of NI contributions establishes entitlement to certain state benefits for workers and their famil ...
contributions that took effect from April 2022 would be reversed from 6 November. On the same day it was announced that plans to introduce the
Health and Social Care Levy The Health and Social Care Levy was a proposed tax in the United Kingdom to be levied by the Government of the United Kingdom for extra health spending, expected to be launched in 2023. Provision for the tax is given under the Health and Social ...
in April 2023 would be scrapped. The
Bank of England The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694 to act as the English Government's banker, and still one of the bankers for the Government of ...
also increased the UK interest rate by 1.75 to 2.25%, the biggest increase in 27 years, in an attempt to curb inflation. Ongoing concerns about a possible recession were impacted when the Bank of England also suggested the UK may already have entered recession. Prior to the statement, the
Office for Budget Responsibility The Office for Budget Responsibility (OBR) is a non-departmental public body funded by the UK Treasury, that the UK government established to provide independent economic forecasts and independent analysis of the public finances. It was formally ...
, a body that provides independent analysis of public finance, offered to produce a forecast to accompany the mini-budget, but this was turned down by the government. Truss has claimed that the government did not have time to wait for the OBR's report, but the OBR has said it would have been ready to produce one in time for 23 September. It was subsequently reported that shortly after Truss took office, senior civil servants at the Treasury and the
Cabinet Office The Cabinet Office is a department of His Majesty's Government responsible for supporting the prime minister and Cabinet. It is composed of various units that support Cabinet committees and which co-ordinate the delivery of government objecti ...
advised her against introducing large tax cuts funded by borrowing without an independent growth forecast from the Office for Budget Responsibility, fearing it would be a high risk strategy and too much of a shock to the economy. Notably, the
Permanent Secretary to the Treasury The UK Permanent Secretary to the Treasury is the most senior civil servant at HM Treasury. The post originated as that of Assistant Secretary to the Treasury in 1805; that office was given new duties and renamed in 1867 as a Permanent Secretaryship ...
,
Tom Scholar Sir Thomas Whinfield Scholar (born 17 December 1968) is a British civil servant who served as Permanent Secretary to the Treasury until 8 September 2022. Scholar was previously the Prime Minister's Adviser on European and Global Issues in the ...
, was sacked by Truss upon entering office, after six years in the role. On the eve of the mini-budget and writing for ''
The Guardian ''The Guardian'' is a British daily newspaper. It was founded in 1821 as ''The Manchester Guardian'', and changed its name in 1959. Along with its sister papers ''The Observer'' and ''The Guardian Weekly'', ''The Guardian'' is part of the Gu ...
'', the newspaper's economics editor,
Larry Elliott Larry Elliott is an English journalist and author who focuses on economic issues. He is the economics editor at ''The Guardian'', and has published seven books on related issues, six of them in partnership with Dan Atkinson. Early life Elliott ...
noted its significance, observing that "most full-blown budgets matter little and are quickly forgotten" but that "this one is a very big deal indeed" as it would mark a change in the approach to the management of the UK economy, when previously the focus had been on balancing the government's books, something former Prime Minister
Margaret Thatcher Margaret Hilda Thatcher, Baroness Thatcher (; 13 October 19258 April 2013) was Prime Minister of the United Kingdom from 1979 to 1990 and Leader of the Conservative Party (UK), Leader of the Conservative Party from 1975 to 1990. S ...
had likened to a housewife managing her household budget. The economic philosophy adopted by Truss and Kwarteng, that lower taxes would pay for themselves by encouraging economic growth, a theory known as
supply-side economics Supply-side economics is a macroeconomic theory that postulates economic growth can be most effectively fostered by lowering taxes, decreasing regulation, and allowing free trade. According to supply-side economics, consumers will benefit fr ...
and called by critics
trickle-down economics Trickle-down economics is a term used in critical references to economic policies that favor the upper income brackets, corporations, and individuals with substantial wealth or capital. In recent history, the term has been used by critics of ...
, earned the name
Trussonomics Liz Truss's term as the prime minister of the United Kingdom began on 6 September 2022 when she accepted an invitation of Queen Elizabeth II to form a government, following the resignation of her predecessor Boris Johnson after a government c ...
, and sought to "challenge Treasury orthodoxy" by running the economy differently. Following Truss' resignation and
Rishi Sunak Rishi Sunak (; born 12 May 1980) is a British politician who has served as Prime Minister of the United Kingdom and Leader of the Conservative Party (UK), Leader of the Conservative Party since October 2022. He previously held two Cabinet of ...
's appointment as Prime Minister, Kwarteng said in a November 2022 interview that he warned Truss that she was "going too fast" with her ill-fated economic plans. On 12 December 2022 treasury officials told MPs Kwarteng neglected warnings the mini-budget could cause a backlash in financial markets.
James Bowler James Bernard Bowler (February 5, 1875 – July 18, 1957) was an American politician from Chicago, Illinois. He served three terms as a United States House of Representatives, United States Representative for Illinois. Elected at age 78, Bowle ...
said he was “absolutely confident Treasury officials set out the right advice” to Kwarteng but could not persuade him to change things, saying “officials advise but ministers decide”. Treasury civil servant, Beth Russell told the Commons
Treasury Select Committee The House of Commons Treasury Committee (often referred to as the Treasury Select Committee) is a select committee of the House of Commons in the Parliament of the United Kingdom. The remit of the committee is to examine the expenditure, administ ...
she and another civil servant "are confident that we gave all the advice to ministers" over the economic and fiscal background, the consequences, the market situation specially over the financing needs, "which was a big issue because of the cost of the measures." Russell maintained officials gave the best advice but ministers take decisions.


The budget

The mini-budget, also known as "The Growth Plan", was designed to boost economic growth through tax cuts, which would be paid for by increasing the
United Kingdom national debt The United Kingdom national debt is the total quantity of money borrowed by the Government of the United Kingdom at any time through the issue of securities by the British Treasury and other government agencies. At the end of December 2021, UK ...
. The package, worth £161 billion over five years plus £60 billion for the 2022–2023 energy bills support package, would have represented the biggest tax cut in the UK since the 1972 "dash for growth" budget of
Anthony Barber Anthony Perrinott Lysberg Barber, Baron Barber, (4 July 1920 – 16 December 2005) was a British Conservative politician who served as Chancellor of the Exchequer from 1970 to 1974. After serving in both the Territorial Army and the Royal A ...
. The budget also set an annual growth target of 2.5%. ''
The Guardian ''The Guardian'' is a British daily newspaper. It was founded in 1821 as ''The Manchester Guardian'', and changed its name in 1959. Along with its sister papers ''The Observer'' and ''The Guardian Weekly'', ''The Guardian'' is part of the Gu ...
'' observed that in spite of the number of measures announced in the statement (which involved much greater amounts than in some budgets),
HM Treasury His Majesty's Treasury (HM Treasury), occasionally referred to as the Exchequer, or more informally the Treasury, is a department of His Majesty's Government responsible for developing and executing the government's public finance policy and ec ...
had described the statement as a "fiscal event" because the
Office for Budget Responsibility The Office for Budget Responsibility (OBR) is a non-departmental public body funded by the UK Treasury, that the UK government established to provide independent economic forecasts and independent analysis of the public finances. It was formally ...
had not been asked to provide analysis of the measures announced. The
Resolution Foundation The Resolution Foundation is an independent British think tank established in 2005. Its stated aim is to improve the standard of living of low- and middle-income families. Appointments In June 2015, the former Conservative MP David Willetts to ...
calculates that the mini-budget cost the nation £30bn, the Truss government caused roughly that amount of the fiscal hole which the Treasury claims is £60bn. The Resolution Foundation estimates that Truss and
Kwasi Kwarteng Akwasi Addo Alfred Kwarteng (born 26 May 1975) is a British Conservative Party politician who has been the Member of Parliament (MP) for Spelthorne in northern Surrey since May 2010. He was Secretary of State for Business, Energy and Industria ...
lost £20bn through unfunded cuts to
national insurance National Insurance (NI) is a fundamental component of the welfare state in the United Kingdom. It acts as a form of social security, since payment of NI contributions establishes entitlement to certain state benefits for workers and their famil ...
and
stamp duty Stamp duty is a tax that is levied on single property purchases or documents (including, historically, the majority of legal documents such as cheques, receipts, military commissions, marriage licences and land transactions). A physical revenu ...
, and another £10bn were lost through raised interest rates and government borrowing costs as the markets reacted to the budget.


Key points

The key points announced in the mini-budget are as follows: * Cut in the basic rate of
income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...
to 19% from April 2023, instead of April 2024 as previously announced (withdrawn on 17 October) * The 45% additional rate of income tax to be abolished for the highest earners in England, Wales and Northern Ireland from April 2023 (withdrawn on 3 October) * From 6 November, reversal of the 1.25% rise in
National Insurance National Insurance (NI) is a fundamental component of the welfare state in the United Kingdom. It acts as a form of social security, since payment of NI contributions establishes entitlement to certain state benefits for workers and their famil ...
introduced in April 2022 * Plans to introduce the
Health and Social Care Levy The Health and Social Care Levy was a proposed tax in the United Kingdom to be levied by the Government of the United Kingdom for extra health spending, expected to be launched in 2023. Provision for the tax is given under the Health and Social ...
from April 2023 scrapped * Plan to scrap an increase of corporation tax from 19% to 25% in April 2023 (withdrawn on 14 October) * Around 120,000 more people on
Universal Credit Universal Credit is a United Kingdom social security payment. It is means-tested and is replacing and combining six benefits for working-age households with a low income: income-related Employment and Support Allowance, income-based Jobseeker's ...
to be asked to look for more work or face benefit sanctions * People over 50 will be given more time with job coaches to help them find work * Repeal of 2017 and 2021 reforms to
IR35 IR35 refers to the United Kingdom's anti-avoidance tax legislation, the intermediaries legislation contained in Chapter 8 of Income Tax (Earnings and Pensions) Act 2003. The legislation is designed to tax 'disguised' employment at a rate similar ...
anti-avoidance tax legislation governing off-payroll work (withdrawn on 17 October) * Annual tax-free corporate investment allowance to remain at £1m indefinitely * Regulations change to allow pension funds to increase UK investments * Tax relief for investors, allowing new and start-up companies to raise up to £250,000 of investment * Maximum share options for employees doubled from £30,000 to £60,000 *
Stamp duty Stamp duty is a tax that is levied on single property purchases or documents (including, historically, the majority of legal documents such as cheques, receipts, military commissions, marriage licences and land transactions). A physical revenu ...
threshold lifted to £250,000 with immediate effect (£425,000 for first time buyers) * A two-year freeze on energy bills that will cost an estimated £60bn over six months, and is forecast to reduce inflation by 5% (reduced to six months on 17 October) * The limit on bankers' bonuses is scrapped * Re-introduce
VAT A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the en ...
-free shopping for overseas visitors, extended to visitors from EU (withdrawn on 17 October) * Scrapping of planned increases in the duties on beer, cider, wine and spirits * Plans for investment zones in England, with 38 initially proposed * Liberalising of planning laws and scrapping of EU planning regulations The Chancellor also announced the closure of the Office of Tax Simplification, effective when the next Finance Bill receives
Royal Assent Royal assent is the method by which a monarch formally approves an act of the legislature, either directly or through an official acting on the monarch's behalf. In some jurisdictions, royal assent is equivalent to promulgation, while in other ...
.


Reaction


Currency, interest rate, and debt

On 23 September, and following the mini-budget, the
pound sterling Sterling (abbreviation: stg; Other spelling styles, such as STG and Stg, are also seen. ISO code: GBP) is the currency of the United Kingdom and nine of its associated territories. The pound ( sign: £) is the main unit of sterling, and t ...
fell sharply in response to the government's planned spending increases and tax cuts, losing 3% against the US dollar and dropping below $1.09. It also fell 0.75% against the
euro The euro ( symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . ...
. On 26 September, sterling reached an all-time low against the dollar, dropping to $1.0327, its lowest since
Decimal Day Decimal Day in the United Kingdom and in Ireland was Monday 15 February 1971, the day on which each country decimalised its respective £sd currency of pounds, shillings, and pence. Before this date, the British pound sterling (symbol "£" ...
in 1971. As a result, the probability of pound–dollar parity by the end of 2022, a situation when £1.00 is worth $1.00, increased to 60%. Following a slight recovery, it fell again on 28 September to $1.05. On 30 September, and after another slight recovery, the pound fell again, to $1.1082, following an emergency meeting between Truss, Kwarteng and the
Office for Budget Responsibility The Office for Budget Responsibility (OBR) is a non-departmental public body funded by the UK Treasury, that the UK government established to provide independent economic forecasts and independent analysis of the public finances. It was formally ...
, and when the Treasury resisted calls for the early publication of an OBR forecast. On 3 October, and following Kwarteng's announcement of a reversal of the plans to scrap the higher rate of income tax, the pound rose to pre-mini-budget levels, reaching $1.13, before dropping slightly to $1.12. The following day it rose to $1.14 after Kwarteng's announcement that an Office for Budget Responsibility report would be published "shortly". On 11 October the pound again fell, reaching a two-week low, after Andrew Bailey, the
Governor of the Bank of England The governor of the Bank of England is the most senior position in the Bank of England. It is nominally a civil service post, but the appointment tends to be from within the bank, with the incumbent grooming their successor. The governor of the Ba ...
, confirmed the end of a scheme to buy government bonds, before settling at $1.10. On 13 October the pound recovered after
Sky News Sky News is a British free-to-air television news channel and organisation. Sky News is distributed via an English-language radio news service, and through online channels. It is owned by Sky Group, a division of Comcast. John Ryley is the hea ...
reported government discussions were taking place about possible changes to the their fiscal plan, reaching a one week high of $1.12540. Stocks and bonds also recovered following the reports. By the next day it had reached $1.13 amid speculation of a possible reversal of the policy, but dropped to $1.12 again after a hastily arranged press conference at which Truss announced the reversal of plans to scrap the raise in corporation tax. The pound strengthened after Hunt reversed the majority of the planned tax cuts on 17 October, rising to $1.13, and ended the day at $1.14. Following Rishi Sunak's appointment as prime minister on 25 October, Sterling rose to $1.149, its highest level since mid-September. On 26 September, and in a bid to calm the markets, the Treasury announced that Kwarteng would publish a medium term fiscal plan on 23 November and that the UK's fiscal watchdog, the Office for Budget Responsibility, would produce a forecast, both giving more details of how the measures would be costed. On the same day the
Bank of England The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694 to act as the English Government's banker, and still one of the bankers for the Government of ...
said it would "not hesitate" to raise interest rates and was "monitoring developments closely" but would not meet again to decide on interest rate levels until November. The following day the Bank's chief economist,
Huw Pill Huw Pill is a British economist, and the chief economist of the Bank of England since September 2021, succceeding Andy Haldane. Pill studied philosophy, politics and economics at University College, Oxford, and graduated in 1989. He earned a ...
, said it would have to deliver a "significant monetary policy response". On 27 September, banks and building societies withdrew some mortgage products amid concerns about an increase in the interest rate.
Virgin Money Virgin Money is a financial services brand used by two independent brand-licensees worldwide from the Virgin Group. Virgin Money branded services are currently available in Australia and the United Kingdom. The brand formerly operated in South Af ...
and the
Skipton Building Society The Skipton Building Society was established in 1853 in Skipton, North Yorkshire, where it remains headquartered. It is the UK's 4th largest building society and has over 1 million members and 100 branches. Its most important subsidiary is the ...
stopped mortgage offers for new customers, and the
Bank of Ireland Bank of Ireland Group plc ( ga, Banc na hÉireann) is a commercial bank operation in Ireland and one of the traditional Big Four Irish banks. Historically the premier banking organisation in Ireland, the Bank occupies a unique position in Iris ...
halted all new mortgage offers.
Nationwide Building Society Nationwide Building Society is a British mutual financial institution, the seventh largest cooperative financial institution and the largest building society in the world with over 16 million members. Its headquarters are in Swindon, England. ...
announced increases in its fixed rate mortgages by between 0.90% and 1.20% from the next day. By 29 September, 40% of mortgage products had been withdrawn from the UK market. By 5 October, the interest rate on a typical two-year
fixed-rate mortgage A fixed-rate mortgage (FRM) is a mortgage loan where the interest rate on the note remains the same through the term of the loan, as opposed to loans where the interest rate may adjust or "float". As a result, payment amounts and the duration of th ...
had risen above 6% for the first time since 2008. On 1 November, the
Nationwide Building Society Nationwide Building Society is a British mutual financial institution, the seventh largest cooperative financial institution and the largest building society in the world with over 16 million members. Its headquarters are in Swindon, England. ...
reported the turbulence caused by the mini-budget had led to a 0.9% fall in house prices during October, the first fall in UK house prices for 15 months, and the largest since June 2020 during the
COVID-19 pandemic The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identif ...
. On 2 October, ''
The Sunday Times ''The Sunday Times'' is a British newspaper whose circulation makes it the largest in Britain's quality press market category. It was founded in 1821 as ''The New Observer''. It is published by Times Newspapers Ltd, a subsidiary of News UK, whi ...
'' reported that Kwarteng had attended a party on the evening of 23 September at which he had discussed aspects of economic policy with
hedge fund A hedge fund is a pooled investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction, and risk management techniques in an attempt to improve performance, such as sho ...
managers, who might gain from a crash in the pound, and who had allegedly "egged him on". Conservative Party Chairman
Jake Berry Sir James Jacob Gilchrist Berry (born 29 December 1978) is a British Conservative Party politician and former solicitor who served as Chairman of the Conservative Party and Minister without Portfolio from 6 September to 25 October 2022. He pr ...
, who attended the same party, rejected claims such a conversation took place. Speaking to the
Treasury Committee The House of Commons Treasury Committee (often referred to as the Treasury Select Committee) is a select committee of the House of Commons in the Parliament of the United Kingdom. The remit of the committee is to examine the expenditure, administr ...
on 18 October, Sir Jon Cunliffe, a deputy governor of the Bank of England, told MPs that the Bank had not been prewarned about the contents of the mini-budget: "We did not have a full briefing of the package the night before. Had they asked us what the market reaction would be, we would have interacted with them." Appearing before the
House of Lords Economic Affairs Committee The Economic Affairs Committee is a select committee of the House of Lords in the Parliament of the United Kingdom The Parliament of the United Kingdom is the supreme legislative body of the United Kingdom, the Crown Dependencies and the ...
on 29 November, Andrew Bailey, the
Governor of the Bank of England The governor of the Bank of England is the most senior position in the Bank of England. It is nominally a civil service post, but the appointment tends to be from within the bank, with the incumbent grooming their successor. The governor of the Ba ...
, also described how the Bank had been unaware of the contents of the mini-budget, even though a member of the Treasury was present at a meeting of the
Monetary Policy Committee Monetary Policy Committee (MPC) may refer to: * Monetary Policy Committee (India) The Monetary Policy Committee is responsible for fixing the benchmark interest rate in India. The meetings of the Monetary Policy Committee are held at least fo ...
the day before, telling Peers, "I don't think Treasury officials were clear what was going to be in he mini-budget.


Bond markets

Ian King of
Sky News Sky News is a British free-to-air television news channel and organisation. Sky News is distributed via an English-language radio news service, and through online channels. It is owned by Sky Group, a division of Comcast. John Ryley is the hea ...
observed that the prospect of a large surge in government borrowing caused a sharp rise in the
bond market The bond market (also debt market or credit market) is a financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the secondary market. This is usually in the form of bonds, b ...
, where yields on
gilt-edged securities Gilt-edged securities are bonds issued by the UK Government. The term is of British origin, and then referred to the debt securities issued by the Bank of England on behalf of His Majesty's Treasury, whose paper certificates had a gilt (or gil ...
immediately rose significantly. Borrowing costs on five-year government bonds experienced their largest increase in a single day on record as traders sold off UK assets. The Treasury announced it would ask the
Debt Management Office The UK Debt Management Office (DMO) is the executive agency responsible for debt and cash management for the UK Government, lending to local authorities and managing certain public sector funds. Purpose The DMO is responsible for day-to-day man ...
to raise an additional £72bn in gilt sales in 2022. King described Kwarteng's strategy as "high-risk, high-reward" and "unashamedly seeking to pursue growth" but said that the bond market was concerned about "this amount of fiscal loosening at a time when there is monetary tightening being carried out by the Bank of England". In response to this bond market volatility, the Bank of England announced on 28 September that it would begin to buy UK government bonds on a temporary basis for the following two weeks to calm the market, doing so because certain types of pension funds were at risk of collapse, with Sir Jon Cunliffe, the Bank's Deputy Governor, later describing some as being a matter of hours from being wound up. The ''
Financial Times The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and published digitally that focuses on business and economic current affairs. Based in London, England, the paper is owned by a Japanese holding company, Nik ...
'' reported that many pension funds were using liability-driven investment derivatives to manage the risk of future interest rate changes, and this forced the funds to provide cash as additional collateral when gilt prices fell sharply. In turn, this led to forced selling, depressing bond prices further before the BoE intervened. The bank planned to buy £5bn of gilts per day with a maturity of at least 20 years, and by 10 October had offered to buy £40bn worth of bonds, though it had actually bought £5bn worth. Kwarteng's 10 October announcement that he intended to bring forward the date on which he would set out his spending plan from 23 November to 31 October caused further volatility in bond markets. Also on 10 October, the Bank of England announced new measures aimed at ensuring an "orderly end" to its scheme of emergency bond purchases, due to end on 14 October. The measures included doubling the amount of bonds it could buy from £5bn a day to £10bn a day in the scheme's final week, and putting in place extra support to ease future pressure on pensions. According to the
Pensions and Lifetime Savings Association The Pensions and Lifetime Savings Association (formerly the National Association of Pension Funds) is a trade association for those involved in designing, operating, advising and investing in all aspects of workplace pensions. The Pensions and ...
, many of its member funds called for the bond-buying program to be extended until Kwarteng's new spending plan was released on 31 October. But as the bank stepped in to buy more bonds on 11 October,
Governor A governor is an administrative leader and head of a polity or political region, ranking under the head of state and in some cases, such as governors-general, as the head of state's official representative. Depending on the type of political ...
Andrew Bailey reiterated that the scheme would end as planned. The bank also warned of a "material risk" to financial stability as markets continued to experience turmoil. The cost of government borrowing across several bonds rose on 14 October after Kwarteng was sacked as Chancellor and Truss announced a reversal of plans to cut corporation tax, Interest on government bonds fell on 17 October as Chancellor Jeremy Hunt announced a reversal of the majority of the tax cuts outlined in the mini-budget. but it remained higher than when Truss took office. Following Sunak's appointment as prime minister on 25 October, gilt yields returned to pre-mini-budget levels, with 30 year gilt yields falling to 3.68%.


International response

On 27 September, the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
(IMF) took the unusual step of issuing a statement in which it openly criticised the plans, saying "the nature of the UK measures will likely increase inequality". The IMF, which acts to stabilise the global economy and sound economic warnings, suggested the government's fiscal plan, due at the time to be published on 23 November, gave it an opportunity to "re-evaluate" tax measures, "especially those that benefit high income earners". On 28 September the global credit ratings agency
Moody's Moody's Investors Service, often referred to as Moody's, is the bond credit rating business of Moody's Corporation, representing the company's traditional line of business and its historical name. Moody's Investors Service provides international ...
described the plans as being "credit negative" and warned they "could more permanently weaken the UK's debt affordability". Moody's subsequently lowered the UK's economic outlook to "negative", doing so on 21 October, and amid what it described as "risks to the UK's debt affordability". as well as "heightened unpredictability in policymaking amid weaker growth prospects and high inflation" and "risks to the UK's debt affordability from likely higher borrowing and risk of a sustained weakening in policy credibility". On 16 October, U.S. president Joe Biden said: "I wasn't the only one that thought it was a mistake. I think that the idea of cutting taxes on the super-wealthy when ... I disagree with the policy, but it's up to Britain to make that judgment, not me." Other world leaders and world media also criticised the mini-budget and Truss's economic policy. In late September, the French
Minister of Economy A finance minister is an executive or cabinet position in charge of one or more of government finances, economic policy and financial regulation. A finance minister's portfolio has a large variety of names around the world, such as "treasury", ...
Bruno Le Maire Bruno Le Maire (; born 15 April 1969) is a French politician and former diplomat who has served as Minister of the Economy and Finance since 2017 under President Emmanuel Macron. A former member of The Republicans (LR), which he left in 2017 to ...
noted that the quick rise in interest rates on UK bonds was all the more important that the country's exit from the
European Union The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been des ...
had made it lose financial credibility on the markets.


Business and economic

The statement was broadly welcomed by business groups, including right-wing
think tank A think tank, or policy institute, is a research institute that performs research and advocacy concerning topics such as social policy, political strategy, economics, military, technology, and culture. Most think tanks are non-governmenta ...
s such as the
Adam Smith Institute The Adam Smith Institute (ASI) is a neoliberal UK-based think tank and lobbying group, named after Adam Smith, a Scottish moral philosopher and classical economist. The libertarian label was officially changed to neoliberal on 10 October 201 ...
, the
Centre for Policy Studies The Centre for Policy Studies (CPS) is a think tank and pressure group in the United Kingdom. Its goal is to promote coherent and practical policies based on its founding principles of: free markets, "small state," low tax, national independe ...
, and the
Institute of Economic Affairs The Institute of Economic Affairs (IEA) is a right-wing pressure group and think tank registered as a UK charity Associated with the New Right, the IEA describes itself as an "educational research institute", and says that it seeks to "further t ...
, but economists questioned whether the plans were affordable. Mark Littlewood, director-general of the Institute of Economic Affairs, hailed it as a "boost-up budget" and said it was "refreshing to hear a chancellor talk passionately about the importance of economic growth".
Tony Danker Tony Danker (born 1971) is a British businessman, and has been the director-general of the Confederation of British Industry (CBI) since November 2020. Early life Danker was born in 1971 in Belfast, Northern Ireland. He was educated at Belfast R ...
, Director of the
Confederation of British Industry The Confederation of British Industry (CBI) is a UK business organisation, which in total claims to speak for 190,000 businesses, this is made up of around 1,500 direct members and 188,500 non-members. The non members are represented through the 1 ...
welcomed the reforms to planning and infrastructure: "Today is day one of a new UK growth approach. We must now use this opportunity to make it count and bring growth to every corner of the UK."
Kitty Ussher Katharine Anne Ussher (born 18 March 1971) is a British economist, former Labour Party MP and Treasury minister, and former Chief Executive of the Demos think tank, who is now chief economist at the Institute of Directors. She is also a Non E ...
, chief economist of the
Institute of Directors The Institute of Directors (IoD) is a British professional organisation for company directors, senior business leaders and entrepreneurs. It is the UK's longest running organisation for professional leaders, having been founded in 1903 and incor ...
, also welcomed the budget, describing it as "a good news day for British business". Lisa Hooker, consumer markets lead at
PricewaterhouseCoopers PricewaterhouseCoopers is an international professional services brand of firms, operating as partnerships under the PwC brand. It is the second-largest professional services network in the world and is considered one of the Big Four accounting ...
, felt the tax reductions "should help the consumer longer term" while "short-term energy cost support is important". There were some concerns among the business community. Steven Alton, CEO of the
British Institute of Innkeeping The British Institute of Innkeeping (BII) is the Professional association, professional body for individuals working in the licensed retail industry in the UK. This primarily includes pubs and bars. Background The BII is a registered charity a ...
, said the statement did not address "the vulnerability of our small pub businesses in every community", while Stephen Phipson, CEO of Make UK, welcomed the statement for including a number of "positive measures" but warned it was the sixth growth strategy in a decade, saying this had resulted in "zero certainty" for businesses. Paul Johnson, director of the
Institute for Fiscal Studies The Institute for Fiscal Studies (IFS) is an economic research institute based in London, United Kingdom, which specialises in UK taxation and public policy. It produces both academic and policy-related findings. The institute's aim is to "a ...
, described the plans announced in the statement as a "big gamble", with money being injected into the economy while inflation remains high. A commentary piece in ''The Guardian'' described the statement as "a naked exercise in redistributing wealth upwards" and commented that "it is more or less impossible to find an economist who supports the government's approach, or an economic model able to justify it". David Page, head of macro research at Axa Investment Management, described the statement as "clearly something that suggests a significant amount of extra gilt borrowing, but at the same time, it's fiscal stimulus during a period when the Bank of England is already worried about aggregate demand being too high, and it's highly likely to force the Bank of England to raise rates even more than we thought they were going to otherwise". George Saravelos, global head of foreign exchange research at
Deutsche Bank AG Deutsche Bank AG (), sometimes referred to simply as Deutsche, is a German multinational investment bank and financial services company headquartered in Frankfurt, Germany, and dual-listed on the Frankfurt Stock Exchange and the New York Stoc ...
warned the UK's currency was "in danger" and suggested markets were treating it like a developing economy. Former United States Secretary of the Treasury,
Larry Summers Lawrence Henry Summers (born November 30, 1954) is an American economist who served as the 71st United States secretary of the treasury from 1999 to 2001 and as director of the National Economic Council from 2009 to 2010. He also served as pres ...
, described the UK as behaving like an "emerging market turning into a submerging market", a view echoed by
Nouriel Roubini Nouriel Roubini (born March 9 1958) is a Turkish-born Iranian-American economist. He is Professor Emeritus (2021–present) and was Professor of Economics (1995–2021) at the Stern School of Business, New York University, and also chairman of Ro ...
, an economist who predicted the
2008 financial crisis 8 (eight) is the natural number following 7 and preceding 9. In mathematics 8 is: * a composite number, its proper divisors being , , and . It is twice 4 or four times 2. * a power of two, being 2 (two cubed), and is the first number of t ...
, who warned that UK investments were trading "like an emerging market" and drew comparisons with the events that led to the
1976 sterling crisis The 1976 sterling crisis was a currency crisis in the United Kingdom. Inflation (at close to 25% in 1975, causing high bond yields and borrowing costs), a balance of payments deficit, a public spending deficit, and the 1973 oil crisis were co ...
when the UK was forced to ask the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
for a financial bailout. Samuel Tombs of research firm Pantheon Economics suggested the fall in the value of the pound could increase the cost of living by 0.5% in 2023. Two economists who did voice their support for the measures were
Patrick Minford Anthony Patrick Leslie Minford (born 17 May 1943) is a British macroeconomist who is professor of applied economics at Cardiff Business School, Cardiff University, a position he has held since 1997. He was Edward Gonner Professor of Applied E ...
, a former economic adviser to Margaret Thatcher who Truss had cited as her inspiration, and
Gerard Lyons Gerard Patrick Lyons (born 31 March 1961) is a British economist. Biography Gerard Lyons belongs to an immigrant Irish Catholic family from Kilburn, North West London. Lyons attended St Mary's Primary School in Kilburn and Cardinal Vaughan M ...
, Truss's external economics adviser. Minford argued it had already resulted in stable inflation, moderate interest rates and higher growth, and suggested Truss and Kwarteng "could have banged the drum harder" in its defence, while in an article for the ''
Sunday Express The ''Daily Express'' is a national daily United Kingdom middle-market newspaper printed in tabloid format. Published in London, it is the flagship of Express Newspapers, owned by publisher Reach plc. It was first published as a broadsheet i ...
'' published on 25 September, Lyons said "While all governments want higher growth, few take the actions needed to achieve this. Truss is different." However, Minford later said that he believed the Office for Budget Responsibility should have been involved in the mini-budget in order to reassure the markets, while Lyons subsequently said he had been "very clear" about warning both Truss and Kwarteng of the potential impact of their plans. The
Institute for Fiscal Studies The Institute for Fiscal Studies (IFS) is an economic research institute based in London, United Kingdom, which specialises in UK taxation and public policy. It produces both academic and policy-related findings. The institute's aim is to "a ...
said the Chancellor was "betting the house" by putting government debt on an "unsustainable rising path". Kwarteng rejected suggestions he was gambling with the economy, and suggested the economic policy pursued by the
Second Johnson ministry The second Johnson ministry began on 16 December 2019, three days after Boris Johnson's audience with Queen Elizabeth II where she invited him to form a new administration following the 2019 general election, in which the Conservative Party w ...
was more of a gamble, saying: "What was a gamble, in my view, was sticking to the course we are on. So what we had to do was have a reboot, a rethink." Danny Blanchflower, who sat on the Bank of England's Monetary Policy Committee for three years, questioned the credibility of both Truss and Kwarteng, describing their actions as "raging incompetence". Charlie Bean, a former member of the Office for Budget Responsibility and Bank of England deputy governor, suggested the government's three-year plan to reduce debt as a percentage of
GDP Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is ofte ...
would lead to a shortfall of £60bn to £70bn. The £60bn figure was also cited by the IFS, which suggested government borrowing would reach £100bn by 2026, when it had previously been forecast to be around £30bn, and that a solution to this high figure would be to implement cuts in government spending. But Truss maintained the policies can be introduced without spending cuts. The IMF said the plans outlined in the mini-budget would increase growth in the short term, but "complicate the fight" against rising prices. Writing after Truss had announced her resignation as Prime Minister, William Keegan, a former Economics Editor of ''
The Observer ''The Observer'' is a British newspaper published on Sundays. It is a sister paper to ''The Guardian'' and ''The Guardian Weekly'', whose parent company Guardian Media Group Limited acquired it in 1993. First published in 1791, it is the w ...
'', suggested that Truss's plans were based in part on "a misunderstanding of Thatcherism and its attitude to taxation". He highlighted the 1979 budget, delivered at the start of
Thatcher's premiership Margaret Thatcher's term as the prime minister of the United Kingdom began on 4 May 1979 when she accepted an invitation of Queen Elizabeth II to form a government, and ended on 28 November 1990 upon her resignation. She was elected to the pos ...
by Chancellor
Geoffrey Howe Richard Edward Geoffrey Howe, Baron Howe of Aberavon, (20 December 1926 – 9 October 2015) was a British Conservative politician who served as Deputy Prime Minister of the United Kingdom from 1989 to 1990. Howe was Margaret Thatcher ...
, which had introduced substantial tax cuts, reducing the top rate of tax from 83% to 60% and the basic rate from 33% to 30%, but offset them with an increase in
VAT A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the en ...
from 8% to 15%. "The shock and horror that greeted Truss and co was not just that they planned unfunded tax cuts but that they were borrowing to finance them, and the proceeds were going to those who least needed them. After a decade of austerity, this was the last straw, offending even the prospective beneficiaries."


Media

The mini-budget initially won broad favour in the right-leaning media, while other outlets were less approving. On 24 September, the ''
Daily Mail The ''Daily Mail'' is a British daily middle-market tabloid newspaper and news websitePeter Wilb"Paul Dacre of the Daily Mail: The man who hates liberal Britain", ''New Statesman'', 19 December 2013 (online version: 2 January 2014) publish ...
''s front page ran with the headline "At last! A true Tory budget", and went on to quote the
Confederation of British Industry The Confederation of British Industry (CBI) is a UK business organisation, which in total claims to speak for 190,000 businesses, this is made up of around 1,500 direct members and 188,500 non-members. The non members are represented through the 1 ...
which claimed there was "no choice but to go for growth". The ''
Daily Express The ''Daily Express'' is a national daily United Kingdom middle-market newspaper printed in tabloid format. Published in London, it is the flagship of Express Newspapers, owned by publisher Reach plc. It was first published as a broadsheet i ...
'' declared it to be an "extraordinary package of measures" and said that Kwarteng would never apologise for "having the courage to bet big" on Britain. The budget, it said, would put Britain "back on top". In contrast, the '' i'' newspaper said that the fall in sterling was a "punishing early verdict" from the markets, and warned of a Conservative backlash, while ''
The Independent ''The Independent'' is a British online newspaper. It was established in 1986 as a national morning printed paper. Nicknamed the ''Indy'', it began as a broadsheet and changed to tabloid format in 2003. The last printed edition was publis ...
'' quoted
Frances O'Grady Frances Lorraine Maria O'Grady, Baroness O'Grady of Upper Holloway (born 9 November 1959) became the General Secretary of the British Trades Union Congress (TUC) in 2013, the first woman to hold the position. After O'Grady presented her resignat ...
, the
General Secretary Secretary is a title often used in organizations to indicate a person having a certain amount of authority, power, or importance in the organization. Secretaries announce important events and communicate to the organization. The term is derived ...
of the
Trades Union Congress The Trades Union Congress (TUC) is a national trade union centre A national trade union center (or national center or central) is a federation or confederation of trade unions in a country. Nearly every country in the world has a national tra ...
, who branded it "Robin Hood in reverse". ''
The Guardian ''The Guardian'' is a British daily newspaper. It was founded in 1821 as ''The Manchester Guardian'', and changed its name in 1959. Along with its sister papers ''The Observer'' and ''The Guardian Weekly'', ''The Guardian'' is part of the Gu ...
'' described it as a "budget for the rich".
Allister Heath Allister Georges Freund Heath (born 1977), is a French-born British business journalist, author and commentator. He was appointed as the new editor of ''The Sunday Telegraph'' in April 2017. Early life and education The son of Alexander and ...
, editor of ''
The Sunday Telegraph ''The Sunday Telegraph'' is a British broadsheet newspaper, founded in February 1961 and published by the Telegraph Media Group, a division of Press Holdings. It is the sister paper of ''The Daily Telegraph ''The Daily Telegraph'', kn ...
'' wrote that it was "the best budget I have ever heard a British chancellor deliver". Of its content he said, "The tax cuts were so huge and bold, the language so extraordinary, that at times I had to pinch myself to make sure I wasn’t dreaming, that I hadn’t been transported to a distant land that actually believed in the economics of Milton Friedman and FA Hayek". He went on to predict "a new
big bang The Big Bang event is a physical theory that describes how the universe expanded from an initial state of high density and temperature. Various cosmological models of the Big Bang explain the evolution of the observable universe from the ...
in the City" and "dozens of new
Canary Wharf Canary Wharf is an area of London, England, located near the Isle of Dogs in the London Borough of Tower Hamlets. Canary Wharf is defined by the Greater London Authority as being part of London's central business district, alongside Central Lo ...
s on steroids". He subsequently described the negative market reaction as "dispiriting", and argued that the problem was "one of presentation and context". Alex Brummer, City editor at the ''
Daily Mail The ''Daily Mail'' is a British daily middle-market tabloid newspaper and news websitePeter Wilb"Paul Dacre of the Daily Mail: The man who hates liberal Britain", ''New Statesman'', 19 December 2013 (online version: 2 January 2014) publish ...
'', called it "seismic" and said "By taking a hatchet to taxes and placing growth front and centre of economic policy, the chancellor has produced a genuine Tory package elbowing to one side the Treasury’s fiscal conservatism". But
Martin Wolf Martin Harry Wolf (born 16 August 1946 in London) is a British journalist of Austrian-Dutch descent who focuses on economics. He is the associate editor and chief economics commentator at the ''Financial Times''. Early life Wolf was born in ...
of ''
The Financial Times The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and published digitally that focuses on business and economic current affairs. Based in London, England, the paper is owned by a Japanese holding company, Nikk ...
'' thought it would "do nigh on nothing to raise medium-term growth, but risks serious macroeconomic instability". He was also critical of the government's decision to not ask the Office for Budget Responsibility to assess its impact, describing it as "simply scandalous", and suggesting "This government may be indifferent to painful reality. But reality usually wins in the end."


Political

Members of the Labour Party described the statement as "casino economics" and suggested it was a budget that would be of greater benefit to the wealthy than those on moderate incomes. Labour and some
Conservative Party The Conservative Party is a name used by many political parties around the world. These political parties are generally right-wing though their exact ideologies can range from center-right to far-right. Political parties called The Conservative P ...
members of Parliament (MPs) also suggested it was wrong to cut taxes. Labour's deputy leader,
Angela Rayner Angela Rayner (' Bowen; born 28 March 1980) is a British politician serving as Shadow Chancellor of the Duchy of Lancaster, Shadow Minister for the Cabinet Office and Shadow Secretary of State for the Future of Work since 2021. She has been Shad ...
, suggested the budget would benefit the top 1% of earners. At the 2022
Labour Party Conference The Labour Party Conference is the annual conference of the British Labour Party. It is formally the supreme decision-making body of the party and is traditionally held in the final week of September, during the party conference season when the ...
, leader
Keir Starmer Sir Keir Rodney Starmer (; born 2 September 1962) is a British politician and barrister who has served as Leader of the Opposition and Leader of the Labour Party since 2020. He has been Member of Parliament (MP) for Holborn and St Pancras ...
said Labour would reverse the cut to the top rate of income tax if the party were to win the next UK general election. The crisis unfolded during the
party conference season In the United Kingdom the party conference season is the period of three weeks in September and October of each year, whilst the House of Commons is in recess, in which the annual political party conferences are held. The Conservative Party Co ...
when Parliament is traditionally in recess, and there were calls from both Labour and the Liberal Democrats for Parliament to be recalled. At his party's annual conference,
Ian Blackford Ian Blackford (born 14 May 1961) is a Scottish politician who served as Leader of the Scottish National Party (SNP) in the House of Commons from 2017 to 2022. He has been the Member of Parliament (MP) for Ross, Skye and Lochaber since 2015. Or ...
, the
Scottish National Party The Scottish National Party (SNP; sco, Scots National Pairty, gd, Pàrtaidh Nàiseanta na h-Alba ) is a Scottish nationalist and social democratic political party in Scotland. The SNP supports and campaigns for Scottish independence from ...
's leader at Westminster, described Truss and Kwarteng as having made "the worst first impression in the history of British politics" with a budget that "will go down as one of the worst financial interventions in modern history". Scotland's first minister,
Nicola Sturgeon Nicola Ferguson Sturgeon (born 19 July 1970) is a Scottish politician serving as First Minister of Scotland and Leader of the Scottish National Party (SNP) since 2014. She is the first woman to hold either position. She has been a member of ...
, hinted that she was unlikely to match income tax cuts for the highest earners in Scotland, describing the mini-budget as "reckless". Wales's finance minister, Rebecca Evans, said the
Welsh Government The Welsh Government ( cy, Llywodraeth Cymru) is the Welsh devolution, devolved government of Wales. The government consists of ministers and Minister (government), deputy ministers, and also of a Counsel General for Wales, counsel general. Minist ...
would keep the 45p top tax rate for those earning over £150,000 if it were possible for them to do so. Speaking two days after making his statement to the House of Commons, Kwarteng dismissed claims the budget would be more beneficial to the wealthy and said he planned to make further tax cuts: "We've actually put more money into people's pockets. We're bringing forward the cut in the basic rate f income taxand there's more to come. I want to see over the next year, people retain more of their income, because I believe it's the British people that are going to drive this economy."
Kenneth Clarke Kenneth Harry Clarke, Baron Clarke of Nottingham, (born 2 July 1940), often known as Ken Clarke, is a British politician who served as Home Secretary from 1992 to 1993 and Chancellor of the Exchequer from 1993 to 1997 as well as serving as de ...
, himself a former Conservative Chancellor, said the strategy risked increasing inflation without helping economic growth, rejecting the idea "that you make tax cuts for the wealthiest 5%, and it makes them work so much harder, and rush to invest, and it pays for itself or even attracts investment into the country".
Kit Malthouse Christopher Laurie "Kit" Malthouse (born 27 October 1966) is a British politician and businessman who served as Secretary of State for Education from 6 September to 25 October 2022. A member of the Conservative Party, he previously served as C ...
, appointed Education Secretary in Truss's government, said he was surprised by the market reaction to the mini-budget, as Truss had "advertised" a change in policy in advance. At the annual
Conservative Party Conference The Conservative Party Conference (CPC) is a four-day national conference event held by the Conservative Party in the United Kingdom. It takes place every year around October during the British party conference season, when the House of Commons is ...
in Birmingham, party member
Michael Gove Michael Andrew Gove (; born Graeme Andrew Logan, 26 August 1967) is a British politician serving as Secretary of State for Levelling Up, Housing and Communities and Minister for Intergovernmental Relations since 2021. He has been Member of Parli ...
described the plans as deeply concerning and "not conservative". On 26 September,
BBC News BBC News is an operational business division of the British Broadcasting Corporation (BBC) responsible for the gathering and broadcasting of news and current affairs in the UK and around the world. The department is the world's largest broadca ...
reported that a number of Conservative MPs were concerned the reaction to the budget statement could damage the party's economic reputation.
Sky News Sky News is a British free-to-air television news channel and organisation. Sky News is distributed via an English-language radio news service, and through online channels. It is owned by Sky Group, a division of Comcast. John Ryley is the hea ...
quoted an unnamed Conservative MP and former minister who suggested letters of no confidence in Truss were being sent to the chair of the Conservative Party's
1922 Committee The 1922 Committee, formally known as the Conservative Private Members' Committee, is the parliamentary group of the Conservative Party in the House of Commons of the United Kingdom. The committee, consisting of all Conservative backbench member ...
in an attempt to trigger another leadership election. ''
The Independent ''The Independent'' is a British online newspaper. It was established in 1986 as a national morning printed paper. Nicknamed the ''Indy'', it began as a broadsheet and changed to tabloid format in 2003. The last printed edition was publis ...
'' quoted an unnamed Conservative MP who suggested she could be replaced by Christmas if she did not reverse the plans. The journalist and broadcaster
Andrew Marr Andrew William Stevenson Marr (born 31 July 1959) is a British journalist and broadcaster. Beginning his career as a political commentator, he subsequently edited ''The Independent'' newspaper from 1996 to 1998 and was political editor of BBC N ...
thought another leadership election so soon would be unlikely. Writing for ''
The Sunday Times ''The Sunday Times'' is a British newspaper whose circulation makes it the largest in Britain's quality press market category. It was founded in 1821 as ''The New Observer''. It is published by Times Newspapers Ltd, a subsidiary of News UK, whi ...
'' after Kwarteng's dismissal, senior Conservative MP and chair of the
House of Commons Education Select Committee The Education Select Committee is a select committee of the House of Commons in the Parliament of the United Kingdom. The remit of the committee is to examine the expenditure, administration and policy of the Department for Education and any ass ...
Robert Halfon Robert Henry Halfon (; born 22 March 1969) is a British Conservative Party politician, the Member of Parliament (MP) for Harlow since 2010. Halfon was formerly a researcher for Conservative MPs, including as Chief of Staff to Shadow Chancellor ...
described the party as behaving like "libertarian jihadists" and urged them to reconnect with the blue collar conservatives who voted for them. He also demanded a "dramatic reset" on policy. Politicians who spoke in favour of the mini-budget included
Nigel Farage Nigel Paul Farage (; born 3 April 1964) is a British broadcaster and former politician who was List of UK Independence Party leaders, Leader of the UK Independence Party (UKIP) from 2006 to 2009 and 2010 to 2016 and Brexit Party#Leaders, Lea ...
, the former leader of the
UK Independence Party The UK Independence Party (UKIP; ) is a Eurosceptic, right-wing populist political party in the United Kingdom. The party reached its greatest level of success in the mid-2010s, when it gained two members of Parliament and was the largest par ...
, who was one of the first to signal their approval, describing the statement as "the best Conservative budget since 1986", when the Thatcher Government had cut income tax from 30% to 29%. It was also welcomed by Sammy Wilson, an MP for the
Democratic Unionist Party The Democratic Unionist Party (DUP) is a unionist, loyalist, and national conservative political party in Northern Ireland. It was founded in 1971 during the Troubles by Ian Paisley, who led the party for the next 37 years. Currently led by J ...
, who said in a statement, "The commitment to allow people retain more of their money is welcome and will help the economy grow", and claimed it would "increase living standards, boost employment and raise revenue for public services". Some reports suggested that "multiple" Conservative MPs were prepared to vote against elements of the mini-budget.
Michael Gove Michael Andrew Gove (; born Graeme Andrew Logan, 26 August 1967) is a British politician serving as Secretary of State for Levelling Up, Housing and Communities and Minister for Intergovernmental Relations since 2021. He has been Member of Parli ...
, a senior MP, described the removal of the top 45% rate as "a display of the wrong values". In response, party chairman
Jake Berry Sir James Jacob Gilchrist Berry (born 29 December 1978) is a British Conservative Party politician and former solicitor who served as Chairman of the Conservative Party and Minister without Portfolio from 6 September to 25 October 2022. He pr ...
suggested that MPs who voted against the mini-budget would lose the party
whip A whip is a tool or weapon designed to strike humans or other animals to exert control through pain compliance or fear of pain. They can also be used without inflicting pain, for audiovisual cues, such as in equestrianism. They are generally e ...
. Following the government's reversal of plans to abolish the top tax rate, former cabinet member
Grant Shapps Grant Shapps (born 14 September 1968) is a British politician who is serving as Secretary of State for Business, Energy and Industrial Strategy since October 2022. He previously served as Secretary of State for Transport in the Premiership of Bo ...
said that the policy "didn't make sense", while
Home Secretary The secretary of state for the Home Department, otherwise known as the home secretary, is a senior minister of the Crown in the Government of the United Kingdom. The home secretary leads the Home Office, and is responsible for all national ...
Suella Braverman Sue-Ellen Cassiana "Suella" Braverman (; ''née'' Fernandes, born 3 April 1980) is a British barrister and politician who has served as Home Secretary since 25 October 2022. She previously held the position from 6 September to 19 October 2022 ...
accused Conservative MPs of staging a "coup" against the government. According to a retrospective article by Edward Malnick of ''The Telegraph'', the mini-budget's failure came down to the lack of experience among the people Truss had appointed to her team, and poor communication of its objectives, notably the language she and Kwarteng used to promote it. Malnick quotes an unnamed senior minister who said that phrases such as "supply-side reforms" and "growth" did not make an impact with the public as many people would not understand the terms, and no attempt was made to explain it in a way that could be understood: "Instead of references to "growth", the Government should have been telling voters that they wanted to make their children richer than them".


Opinion polling

A
YouGov YouGov is a British international Internet-based market research and data analytics firm, headquartered in the UK, with operations in Europe, North America, the Middle East and Asia-Pacific. In 2007, it acquired US company Polimetrix, and sinc ...
opinion poll put the Conservative Party 17% behind the Labour Party, the biggest Labour lead since 2001, which ''
The Times ''The Times'' is a British daily national newspaper based in London. It began in 1785 under the title ''The Daily Universal Register'', adopting its current name on 1 January 1788. ''The Times'' and its sister paper ''The Sunday Times'' (fou ...
'' attributed to "voters turning against Kwasi Kwarteng's tax-cutting budget" with just 19% of those polled considering the mini-budget to be "fair". A further YouGov opinion poll carried out on 28–29 September showed an increased Labour lead of 33% over the Conservative Party, the largest party lead since the late 1990s. The poll gave Labour 54 points to the Conservatives' 21. At the 2022 Conservative Party Conference political pollster
John Curtice Sir John Kevin Curtice (born 10 December 1953) is a British political scientist who is currently professor of politics at the University of Strathclyde and senior research fellow at the National Centre for Social Research. He is particularly in ...
told delegates Labour were "very clearly the favourites" to win the next election, even if their lead in the polls were to be reduced, with Truss as unpopular with voters as her predecessor,
Boris Johnson Alexander Boris de Pfeffel Johnson (; born 19 June 1964) is a British politician, writer and journalist who served as Prime Minister of the United Kingdom and Leader of the Conservative Party from 2019 to 2022. He previously served as F ...
, had been prior to his resignation. Following Truss's first Conservative Party Conference as leader, an opinion poll for ''
The Observer ''The Observer'' is a British newspaper published on Sundays. It is a sister paper to ''The Guardian'' and ''The Guardian Weekly'', whose parent company Guardian Media Group Limited acquired it in 1993. First published in 1791, it is the w ...
'', published on 8 October, gave her an approval rating of −47, their worst ever rating for a sitting prime minister. An opinion poll published by PeoplePolling on 14 October gave the Conservatives 19 points against 53 for Labour, with those having a favourable view of Truss at 9%. A poll published by Opinium Research on 16 October calculated the number of House of Commons seats each party would win at a general election, giving Labour 411 seats and the Conservatives 137, a loss for the Conservatives of 219 seats, and creating a landslide win for Labour similar to that of the 1997 general election.


Government response


Initial responses

On 28 September, the Treasury rejected calls to abandon the plans outlined in the mini-budget. BBC News reported that
Chris Philp Christopher Ian Brian Mynott Philp (born 6 July 1976) is a British politician serving as Minister of State for Crime, Policing and Fire since October 2022. He served as Minister for the Cabinet Office and Paymaster General in October 2022. A me ...
,
Chief Secretary to the Treasury The chief secretary to the Treasury is a ministerial office in the government of the United Kingdom. The office is the second most senior in the Treasury, after the chancellor of the Exchequer. The office was created in 1961, to share the burden ...
, would write to government departments asking them to find spending efficiencies. On 29 September, and making her first public appearance since the mini-budget, Prime Minister Truss gave a series of interviews to
BBC Local Radio BBC Local Radio (also referred to as Local BBC Radio) is the BBC's local and regional radio division for England and the Channel Islands, consisting of forty stations. History The popularity of pirate radio was to challenge a change within ...
stations in which she sought to defend the policy by saying her government had "done the right thing by taking action urgently" and that the Treasury was "working closely" with the Bank of England. She attributed the "biggest part" of the government's intervention to the energy bills cap, and stated that the problem was not solely a UK one and there were "difficult markets around the world" due to the
2022 Russian invasion of Ukraine On 24 February 2022, in a major escalation of the Russo-Ukrainian War, which began in 2014. The invasion has resulted in tens of thousands of deaths on both sides. It has caused Europe's largest refugee crisis since World War II. An ...
. She also spoke of being prepared to make "controversial and difficult" decisions. Later the same day, Kwarteng told MPs that the mini-budget was needed to prevent a collapse in consumer spending, and that the government had protected the economy. On 30 September, Truss and Kwarteng held a 48-minute emergency meeting with the Office for Budget Responsibility at 11 Downing Street, after which the OBR said it would deliver an initial forecast on 7 October. The government later announced the OBR forecast would be published on 23 November, along with the rest of its economic plans. Some Conservative MPs, including
Mel Stride Melvyn John Stride (born 30 September 1961) is a British politician who has served as Secretary of State for Work and Pensions since October 2022. He previously served in the May Government as Financial Secretary to the Treasury and Paymaster ...
, the chair of the Treasury Select Committee, had called for the report to be published earlier, but Truss said she was "committed" to a publication date of 23 November. Writing in the 1 October edition of '' The Sun'', Truss conceded the mini-budget had caused "disruption", but said the government had "acted decisively" to help people with the cost of living. Appearing on the 2 October edition of
BBC One BBC One is a British free-to-air public broadcast television network owned and operated by the BBC. It is the corporation's flagship network and is known for broadcasting mainstream programming, which includes BBC News television bulletins, p ...
's '' Sunday with Laura Kuenssberg'', Truss conceded that her government should have done more to "lay the ground" for their economic plans, but said they would continue with the plans. The following day, Kwarteng announced a reversal of the plans to abolish the 45% tax rate, saying that the issue had become "a massive distraction on what was a strong package". He also announced that the government would publish a new fiscal statement as well as the independent OBR's forecast earlier than the originally planned 23 November date; this was later confirmed to be 31 October. Truss used her
Twitter Twitter is an online social media and social networking service owned and operated by American company Twitter, Inc., on which users post and interact with 280-character-long messages known as "tweets". Registered users can post, like, and ...
account to reiterate the reversal, saying "We get it and we have listened". On 4 October, while speaking to Chris Mason, the BBC's political editor, Truss said she was still in favour of lowering taxes for the most wealthy, but that it was something she was not currently contemplating, and that her priority was to "get through the winter". At her first party conference speech as leader, delivered on 5 October, Truss said she would break Britain out of a "high-tax, low-growth cycle" and attacked what she described as an "anti-growth coalition" she believed was holding the UK back from realising its full potential. On 4 October, Kwarteng suggested to
GB News GB News is a British free-to-air television and radio news channel. The channel is available on Freeview, Freesat, Sky, YouView, Virgin Media and via the internet. Since 4 January 2022, an audio simulcast of the station is available on DAB+ ra ...
that the mini-budget had been delivered in the "high pressure" aftermath of the Queen's death, while also stating on two separate occasions that the abolition of the highest tax rate had only been "postponed". While apologising for the chaos caused by the mini-budget, former Chancellor
Nadhim Zahawi Nadhim Zahawi ( ar, ناظم الزهاوي, translit=Nāẓim az-Zahāwī; ku, نەدیم زەهاوی, translit=Nedîm Zehawî; born 2 June 1967) is an Iraqi-born British politician serving as Chairman of the Conservative Party and Minister ...
attracted derision after telling an edition of BBC One's ''
Question Time A question time in a parliament occurs when members of the parliament ask questions of government ministers (including the prime minister), which they are obliged to answer. It usually occurs daily while parliament is sitting, though it can be ca ...
'' that Russian President
Vladimir Putin Vladimir Vladimirovich Putin; (born 7 October 1952) is a Russian politician and former intelligence officer who holds the office of president of Russia. Putin has served continuously as president or prime minister since 1999: as prime min ...
was to blame for the market turmoil. Kwarteng received the Office for Budget Responsibility's forecast on 7 October. On 10 October he brought forward the date of his "medium-term fiscal plan" from 23 November to 31 October. It was confirmed the OBR report would also be published on the same day. At the 12 October session of
Prime Minister's Questions Prime Minister's Questions (PMQs, officially known as Questions to the Prime Minister, while colloquially known as Prime Minister's Question Time) is a constitutional convention in the United Kingdom, currently held as a single session every W ...
, Truss was asked about her leadership election pledge not to make cuts in public spending, and told the House of Commons, "What we will make sure is that over the medium term the debt is falling, but we will do that not by cutting public spending but by making sure we spend public money well". At a meeting of the Conservative Party's
1922 Committee The 1922 Committee, formally known as the Conservative Private Members' Committee, is the parliamentary group of the Conservative Party in the House of Commons of the United Kingdom. The committee, consisting of all Conservative backbench member ...
in Westminster that evening she is reported to have been repeatedly warned by several of her MPs that her policies were causing both economic and political damage.


Dismissal of Chancellor

Speculation about the future of both Truss and Kwarteng continued, with ''Channel 4 News'''s Gary Gibbon noting that an increasing number of Truss's colleagues "now see her as doomed". On 13 October, Sky News reported that discussions were underway in Downing Street about reversing some of the measures announced in the mini-budget. On 14 October, Truss dismissed Kwarteng as Chancellor of the Exchequer after a tenure of 38 days, having summoned him back to the UK from a meeting of finance ministers in Washington in order to fire him. She then replaced him with
Jeremy Hunt Jeremy Richard Streynsham Hunt (born 1 November 1966) is a British politician who has served as Chancellor of the Exchequer since 14 October 2022. He previously served in the Cabinet as Secretary of State for Culture, Olympics, Media and Sport ...
.
Chris Philp Christopher Ian Brian Mynott Philp (born 6 July 1976) is a British politician serving as Minister of State for Crime, Policing and Fire since October 2022. He served as Minister for the Cabinet Office and Paymaster General in October 2022. A me ...
was also replaced by
Edward Argar Edward John Comport Argar (born 9 December 1977) is a British politician serving as Minister of State for Victims and Sentencing since October 2022. He briefly served as Chief Secretary to the Treasury in October 2022. A member of the Conserva ...
as
Chief Secretary to the Treasury The chief secretary to the Treasury is a ministerial office in the government of the United Kingdom. The office is the second most senior in the Treasury, after the chancellor of the Exchequer. The office was created in 1961, to share the burden ...
. At a press conference held in Downing Street later the same day, Truss announced plans to keep the previous government's increase in corporation tax, having conceded "it is clear that parts of our mini-budget went further and faster than markets were expecting". She also stated that government spending would "grow less rapidly than previously planned". But her actions failed to quell questions about her credibility.
Andrew Bridgen Andrew James Bridgen (born 28 October 1964) is a British politician and businessman who has served as the Member of Parliament (MP) for North West Leicestershire since 2010. A member of the Conservative Party and prominent figure on its right wi ...
, the Conservative MP for
North West Leicestershire North West Leicestershire is a local government district in Leicestershire, England. The population of the Local Authority at the 2011 census was 93,348. Its main towns are Ashby-de-la-Zouch, Castle Donington, Coalville and Ibstock. The dist ...
, suggested she could face a leadership challenge within weeks and that removing Kwarteng "when he implemented the policies she asked him to do won't engender loyalty to her", while BBC News quoted an unnamed MP who described her press conference as a "mega-disaster" and said she was "worse than
Corbyn Corbyn is a surname and a given name. Notable people with the name include: Surname * Frederick Corbyn (1791–1853), British surgeon in India * Jeremy Corbyn (born 1949), British politician and leader of the Labour Party 2015–2020 * Piers Corbyn ...
". Sean O'Grady of ''
The Independent ''The Independent'' is a British online newspaper. It was established in 1986 as a national morning printed paper. Nicknamed the ''Indy'', it began as a broadsheet and changed to tabloid format in 2003. The last printed edition was publis ...
'', suggested Hunt's appointment had effectively made him a ''
de facto ''De facto'' ( ; , "in fact") describes practices that exist in reality, whether or not they are officially recognized by laws or other formal norms. It is commonly used to refer to what happens in practice, in contrast with ''de jure'' ("by la ...
'' prime minister, a view echoed by the newspaper's chief political editor,
John Rentoul John Rentoul (born 1958) is a British journalist. He is the chief political commentator for ''The Independent''. Early life Rentoul was born in India, where his father was a minister of the Church of South India. Educated at Wolverhampton Gram ...
. But Hunt insisted that Truss was still in charge of her government. The BBC economics editor,
Faisal Islam Faisal Islam ( bn, ফয়সাল ইসলাম; born 29 May 1977) is a British political and economics journalist who is the economics editor of BBC News and the occasional presenter of ''Newsnight''. He was the political editor of Sky N ...
, wrote that with Hunt's appointment, the economic philosophy of Trussonomics was dead. Edward Malnick of ''The Telegraph'' also seemed doubt over its future prospects: "Supporters of her free market vision fear it has now been killed off for a generation". The day after Truss's announcement, US President Joe Biden took the unusual step of criticising the UK's domestic policy by describing her tax cut plans as a "mistake", and expressed concern the fiscal policies of other countries could affect the US economy amid "worldwide inflation". Speaking on
BBC Radio 4 BBC Radio 4 is a British national radio station owned and operated by the BBC that replaced the BBC Home Service in 1967. It broadcasts a wide variety of spoken-word programmes, including news, drama, comedy, science and history from the BBC' ...
's ''
Today Today (archaically to-day) may refer to: * Day of the present, the time that is perceived directly, often called ''now'' * Current era, present * The current calendar date Arts, entertainment, and media Films * ''Today'' (1930 film), a 1930 A ...
'' programme the day after his appointment as Chancellor, Hunt conceded that mistakes had been made with the mini-budget, chiefly that Kwarteng had been wrong to cut the top tax rate, and that it had been an error to "fly blind" by not seeking the Office for Budget Responsibility's input. He also said that difficult times lay ahead and that some taxes would have to be increased. Following that appearance, the BBC's Laura Kuenssberg wrote that Hunt had "in a little over 24 hours junked russ'seconomic strategy of tax cuts and a promise not to cut public spending". The following day Hunt held a three-hour meeting with Truss at
Chequers Chequers ( ), or Chequers Court, is the country house of the Prime Minister of the United Kingdom. A 16th-century manor house in origin, it is located near the village of Ellesborough, halfway between Princes Risborough and Wendover in Bucking ...
, after which the two were described as being in "violent agreement" about reversing the majority of the tax cuts that had been outlined in the Growth Plan.


Reversal of tax cuts

On 17 October, Hunt brought forward the planned emergency statement, announcing the reversal of the majority of Kwarteng's tax cuts in a televised statement, arguing that "at a time when markets are rightly demanding commitment to sustainable public finances, it is not right to borrow to fund this tax cut". The measures announced by Hunt would lead to an annual saving of £32bn. The only tax cuts from the mini-budget to remain were the cuts to national insurance contributions and the raising of the stamp duty threshold. Plans to scrap the Health and Social Levy would also go ahead because the legislation relating to that was already going through Parliament. Hunt also confirmed the two-year energy price cap would be reduced to six months, and that the government would launch a Treasury-led review into finding an alternative way to help with energy costs that would be less of a financial strain on government. Finally he warned there would be cuts to public spending in the Medium-Term Fiscal Plan on 31 October. Hunt subsequently outlined the changes in a statement to the House of Commons, telling MPs the government would take "eye-watering" decisions to restore trust and confidence in the UK's finances. Responding to the announcement, Shadow Chancellor
Rachel Reeves Rachel Jane Reeves (born 13 February 1979) is a British politician and economist serving as Shadow Chancellor of the Exchequer since 2021. A member of the Labour Party, she has been Member of Parliament for Leeds West since 2010. Born in Lewis ...
said "An arsonist is still an arsonist, even if he runs back into a burning building with a bucket of water". Faisal Islam described the announcement as "the biggest U-turn in British economic history".


Resignation of Truss as Prime Minister

A number of Conservative MPs publicly called for Truss's resignation, citing the loss in public confidence in the government's policies. According to the ''Daily Telegraph'', as of 17 October these MPs included
Crispin Blunt Crispin Jeremy Rupert Blunt (born 15 July 1960) is a British politician who has served as the Member of Parliament (MP) for Reigate since 1997. A member of the Conservative Party, he was the Parliamentary Under-Secretary of State for Prisons and ...
,
Andrew Bridgen Andrew James Bridgen (born 28 October 1964) is a British politician and businessman who has served as the Member of Parliament (MP) for North West Leicestershire since 2010. A member of the Conservative Party and prominent figure on its right wi ...
,
Angela Richardson Angela Joy Richardson (born 21 October 1974) is a British Conservative Party politician, who has served as the Member of Parliament (MP) for Guildford since the 2019 general election. Political career In May 2019, Richardson stood for electi ...
, Charles Walker and
Jamie Wallis Jamie Hamilton Wallis (born 2 June 1984) is a British Conservative Party politician who has been the member of Parliament (MP) for Bridgend in Wales since the 2019 general election. Wallis defeated incumbent Labour MP Madeleine Moon, who had r ...
. As of mid-October, bookmakers were taking odds for the date of her resignation. Conservative Party rules prohibit a challenge to the current incumbent for 12 months after a leadership contest. In the absence of a voluntary resignation by Truss, the other routes to forcing her exit from power included changing the party's rules or forcing a general election. In response to this, the Labour Party started an advertising campaign advocating a general election, with a focus on criticism of Truss's record in government. An opinion poll published by Redfield and Wilton Strategies on 17 October showed a 36-point lead for Labour, the largest ever poll lead for a political party; if reflected in general election, results could give the Conservatives as little as 22 seats in Parliament, resulting in them losing their power as a political force. The
Electoral Calculus Electoral Calculus is a political forecasting web site which attempts to predict future United Kingdom general election results. It considers national factors but excludes local issues. Main features The site was developed by Martin Baxter, w ...
website suggested their number of seats could be as small as one. A YouGov poll published the next day gave Truss a personal rating of –70. House of Commons Speaker,
Lindsay Hoyle Sir Lindsay Harvey Hoyle (born 10 June 1957)'HOYLE, Hon. Lindsay (Harvey)', Who's Who 2013, A & C Black, an imprint of Bloomsbury Publishing plc, 2013; online edn, Oxford University Press, Dec 2012 ; online edn, Nov 201 Retrieved 31 December 20 ...
, granted opposition Labour leader
Keir Starmer Sir Keir Rodney Starmer (; born 2 September 1962) is a British politician and barrister who has served as Leader of the Opposition and Leader of the Labour Party since 2020. He has been Member of Parliament (MP) for Holborn and St Pancras ...
an urgent question for Truss on the afternoon of 17 October, but Downing Street confirmed that Leader of the House,
Penny Mordaunt Penelope Mary Mordaunt (; born 4 March 1973) is a British politician who has been Leader of the House of Commons and Lord President of the Council since September 2022. A member of the Conservative Party, she has been Member of Parliament (MP) ...
, would answer for her instead. Her absence drew criticism from a number of MPs, including Starmer, although she later made a brief appearance in the House, and it was subsequently reported she had been attending a pre-arranged meeting with
Graham Brady Sir Graham Stuart Brady (born 20 May 1967) is a British politician who has served as the Member of Parliament (MP) for Altrincham and Sale West since 1997. A member of the Conservative Party, he has been Chairman of the 1922 Committee since ...
, the chair of the
1922 Committee The 1922 Committee, formally known as the Conservative Private Members' Committee, is the parliamentary group of the Conservative Party in the House of Commons of the United Kingdom. The committee, consisting of all Conservative backbench member ...
. In an interview with the BBC's political editor Chris Mason that evening, Truss said she was "sorry for the mistakes that have been made" but remained "committed to the vision". She also said she would lead the Conservatives into the next UK general election. A YouGov survey of Conservative Party members published on 18 October had reported that a majority of them wanted Truss to resign, with their favoured front runners for her replacement being
Boris Johnson Alexander Boris de Pfeffel Johnson (; born 19 June 1964) is a British politician, writer and journalist who served as Prime Minister of the United Kingdom and Leader of the Conservative Party from 2019 to 2022. He previously served as F ...
as most popular, followed in order by Ben Wallace, Rishi Sunak, Penny Mordaunt,
Kemi Badenoch Olukemi Olufunto Badenoch ( ; née Adegoke, 2 January 1980) is a British politician serving as Secretary of State for International Trade, President of the Board of Trade and Minister for Women and Equalities since 2022. She previously served in ...
,
Jeremy Hunt Jeremy Richard Streynsham Hunt (born 1 November 1966) is a British politician who has served as Chancellor of the Exchequer since 14 October 2022. He previously served in the Cabinet as Secretary of State for Culture, Olympics, Media and Sport ...
and Suella Braverman. Bookmakers placed Sunak first in their list of likely Conservative prime ministerial successors, followed in order by Hunt, Mordaunt, Wallace and Johnson. Starmer,
Nicola Sturgeon Nicola Ferguson Sturgeon (born 19 July 1970) is a Scottish politician serving as First Minister of Scotland and Leader of the Scottish National Party (SNP) since 2014. She is the first woman to hold either position. She has been a member of ...
and numerous voters called for a general election. Calls were intensified following Truss' resignation. On 19 October, during
Prime Minister's Questions Prime Minister's Questions (PMQs, officially known as Questions to the Prime Minister, while colloquially known as Prime Minister's Question Time) is a constitutional convention in the United Kingdom, currently held as a single session every W ...
, Truss addressed Parliament for the first time since the tax cut reversal; when Starmer asked why Truss should continue to lead the country, Truss responded: "I am a fighter and not a quitter. I have acted in the national interest to make sure that we have economic stability." On the same day, Braverman resigned as Home Secretary after a breach of security when she sent an official document using a personal email account, and used her resignation letter to criticise the Truss government's change of policy: "I have concerns about the direction of this government. Not only have we broken key pledges that were promised to our voters, but I have had serious concerns about this Government's commitment to honouring manifesto commitments, such as reducing overall migration numbers and stopping illegal migration, particularly the dangerous small boats crossings."
Grant Shapps Grant Shapps (born 14 September 1968) is a British politician who is serving as Secretary of State for Business, Energy and Industrial Strategy since October 2022. He previously served as Secretary of State for Transport in the Premiership of Bo ...
was appointed to replace her. This was followed by reports that Conservative MPs had been "manhandled" into voting with the government during a parliamentary vote on banning fracking in the UK, uncertainty about whether or not the vote was a
vote of confidence A motion of no confidence, also variously called a vote of no confidence, no-confidence motion, motion of confidence, or vote of confidence, is a statement or vote about whether a person in a position of responsibility like in government or mana ...
, and reports that Chief Whip,
Wendy Morton Wendy Morton (born 9 November 1967) is a British politician who served as Chief Whip of the House of Commons and Parliamentary Secretary to the Treasury from September to October 2022. A member of the Conservative Party, she has been the Member ...
, and her deputy,
Craig Whittaker Craig Whittaker (born 30 August 1962) is a British politician who served as Government Deputy Chief Whip and Treasurer of the Household from September to October 2022. A member of the Conservative Party, he previously served as a Lord Commissi ...
, had resigned, a claim rejected by Downing Street. Brady held talks with Truss on 20 October, and she announced her resignation shortly afterwards, saying: "We set out a vision for a low-tax, high-growth economy that would take advantage of the freedoms of Brexit. I recognize though, given the situation, I cannot deliver the mandate on which I was elected by the Conservative Party. I have therefore spoken to His Majesty the King to announce that I am resigning as leader of the Conservative Party." She went on to confirm an election to choose her successor would be held within the following week.
Rishi Sunak Rishi Sunak (; born 12 May 1980) is a British politician who has served as Prime Minister of the United Kingdom and Leader of the Conservative Party (UK), Leader of the Conservative Party since October 2022. He previously held two Cabinet of ...
won the
October 2022 Conservative Party leadership election The October 2022 Conservative Party leadership election was triggered by Liz Truss's announcement that she would resign as Leader of the Conservative Party and Prime Minister of the United Kingdom, amid an economic and political crisis. Rishi ...
unopposed, and he became prime minister on 25 October. In his first speech as prime minister, Sunak warned that "difficult decisions" lay ahead as he sought to deal with what he described as a "profound economic crisis" but said he would fix the mistakes made by his predecessor. Truss's resignation, 45 days into her term in office, made her the
shortest serving UK prime minister This is a list of prime ministers of the United Kingdom by length of tenure. This is based on the difference between dates; if counted by number of calendar days, figures would be one day greater for each term served. The term "Prime Minister" a ...
. Hunt was retained as Chancellor in Sunak's cabinet. On 26 October, he deferred the date of the medium term fiscal statement from 31 October to 17 November, doing so to ensure it was based on the "most accurate possible" economic forecasts. He also confirmed it would be "upgraded" to a full autumn statement. Michael Gove later wrote that the Conservative Party had "made the wrong choice" by voting for Truss and that plans to cut taxes for the wealthy had been "a holiday from reality". In his first media interview since losing his job as Chancellor, Kwarteng told TalkTV he had warned Truss her economic reforms were moving too fast but she had not heeded that advice: "She said, 'Well, I've only got two years' and I said, 'You will have two months if you carry on like this'. And that is, I'm afraid, what happened."


See also

*
Annual Meetings of the International Monetary Fund and the World Bank Group The IMF and World Bank meet each autumn in what is officially known as the Annual Meetings of the International Monetary Fund and the World Bank Group and each spring in the Spring Meetings of the International Monetary Fund and the World Bank Grou ...
* Bond vigilante *
Budget of the United Kingdom The Budget of His Majesty's Government is an annual budget set by HM Treasury for the following financial year, with the revenues to be gathered by HM Revenue and Customs and the expenditures of the public sector, in compliance with government ...
*
Free Enterprise Group The Free Enterprise Group is a grouping of Thatcherite British Conservative Party (UK), Conservative Party Member of Parliament (United Kingdom), Members of Parliament founded in mid-2011 by Liz Truss. The book ''Britannia Unchained'' was written b ...
* ''
Laissez-faire ''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system in which transactions between private groups of people are free from any form of economic interventionism (such as subsidies) deriving from special interest groups. ...
'' *
March 2021 United Kingdom budget The March 2021 United Kingdom budget, officially known as Protecting the Jobs and Livelihoods of the British People was a budget delivered by Rishi Sunak, the Chancellor of the Exchequer in March 2021. It was expected to be delivered in Autumn ...
* Singapore-on-Thames


References

{{DEFAULTSORT:United Kingdom mini-budget, September 2022 2022 controversies 2022 government budgets 2022 in British politics 2022 in London Economic history of the United Kingdom Budget, September 2022 History of the Conservative Party (UK) September 2022 events in the United Kingdom October 2022 events in the United Kingdom 2022 09 Budget, September 2022