Markets have regained short-term confidence after Britain’s new finance minister ditched most of Prime Minister Liz Truss’ mini-budget, a leading market analyst said on Monday.
Michael Hewson, chief market analyst at CMC Markets, said Britain’s finance minister Jeremy Hunt had “ripped to shreds” the budget put forward by Truss and former finance minister Kwasi Kwarteng, which had caused market turmoil.
Hunt, who was appointed on Friday to fix the country’s finances after Truss’ economic plan hammered the value of British assets, reversed nearly all of Truss’ economic plans and reigned in a vast energy subsidy plan, saying the country needed to regain investor confidence.
Truss had planned for the basic rate of income tax to be cut to 19 per cent from 20 per cent in April 2023, one year earlier than expected. Hunt announced it would now stay at 20 per cent indefinitely. Hunt also reversed the plan to cut the rate of tax on dividends by 1.25 percentage points from next year, which had been valued at around 1 billion pounds a year. He said changes to planned tax cuts would raise 32 billion pounds (US$36 billion) every year.
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