The chancellor asserts that the medium-term plan will be upgraded to a “full autumn statement” and that it is “prudent” to have precise economic projections.
Jeremy Hunt has postponed the release of the government’s economic plan from October 31 to November 17, citing the need for ministers to make “tough decisions…that endure.”
The chancellor was scheduled to present a medium-term fiscal statement in the House of Commons on 31 October, along with a prediction from the Office for Budget Responsibility, following Liz Truss’s tax-cutting mini-budget last month created a black hole in government finances and tumult in the markets.
However, it will now be delayed by more than two weeks and expanded into a full fall statement, with a broader scope and goals for the longer term.
Mr. Hunt, who retains his position as chancellor in Rishi Sunak’s new cabinet, stated that he had advised the incoming prime minister to base any judgments on “realistic economic forecasts.
And he stated that he was “prepared to make politically uncomfortable decisions if it was the right thing to do for the country.”
Additionally, the chancellor disclosed that the autumn statement would include steps to reduce debt “over the medium term.”
Mr. Hunt stated, “Our first objective is economic stability and restoring confidence in the United Kingdom as a country that pays its bills.
“However, it is also crucial that the statement be based on the most accurate economic and financial forecasts feasible.”
The Bank of England is scheduled to provide a statement regarding interest rates on 3 November, therefore the original government statement would have preceded the announcement.
When asked if it was prudent to make the change now, Mr. Hunt stated that Mr. Sunak’s arrival at Number 10 meant there was “the prospect of much longer-term stability for the economy in the country – and in this context, a short two and a half week delay is the best way to ensure that we make the correct decisions”.
The chancellor added, “There has been a lot of market turbulence in the last 48 hours, and the question is how you deal with that turbulence to ensure that the very, very important, very difficult decisions that I and the prime minister have to make are the right ones – decisions that stand the test of time and do the right thing for people at home who are worried about their mortgages, their jobs, the cost of living, their bills, and so forth.
“Therefore, it is crucial that both the public finances and economic growth estimates are accurate, which is why this is the correct and responsible move.”
Sarah Olney, a representative for the Liberal Democrats, stated that the postponement “risks placing mortgage debtors, pensioners, and suffering families under a cloud of detrimental uncertainty.”
She urged the prime minister to ensure that benefits and pensions will be indexed to inflation and that no public services, including the NHS, will be slashed.
“Conservative MPs installed Sunak in Number 10 without anyone voting for him or being informed of his objectives for the country,” she claimed.
The public has a right to know immediately what lies ahead and that they will not be forced to pay for the Conservative Party’s destruction of the economy.
How did we get here?
Ms. Truss came to power in September after pushing all summer for reduced taxes and greater economic growth.
Three weeks into her tenure, her Chancellor Kwasi Kwarteng revealed a slew of tax-cutting proposals to be financed by government borrowing in a mini-budget unaccompanied by an OBR prediction.
This caused the pound to plummet, mortgages to be withdrawn, and the Bank of England to be compelled to interfere.
Despite an early U-turn on removing the 45p tax rate for the richest incomes and a promise of a medium-term budget announcement, the markets remained volatile and the then-prime minister sacked her chancellor and hired Mr. Hunt in his place.
Within three days, he had reversed nearly all of the initiatives, but he forewarned that more difficult decisions lay ahead because the errors of Ms. Truss and Mr. Kwarteng had worsened the state of the government’s finances.
Ms. Truss resigned in the same week and was replaced by Mr. Sunak, who said on the steps of Downing Street that “economic stability and confidence [would be] at the center of this government’s mission.”
And later that morning, a Treasury source indicated to our political editor Beth Rigby that it was “very probable.”
