Liz Truss reverses part of the mini-budget
The Prime Minister has made a statement after sacking the Chancellor
Last updated 14th Oct 2022
The Prime Minister has reversed a decision from the mini-budget and decided to keep a planned increase in corporation tax.
In a press conference this afternoon (14th October) Liz Truss said that plans from the previous government to increase corporation tax from 19% to 25% will remain, despite it previously being cancelled in the government's mini-budget.
There has already been one U-turn on that mini-budget as the plan to abolish the top rate of income tax was abandoned.
In the press conference Liz Truss said: “It is clear that parts of our mini-budget went further and faster than markets were expecting so the way we are delivering our mission right now has to change.”
Liz Truss says the government must 'act now'
Liz Truss said the Government must “act now” to reassure the markets of “our fiscal discipline”, as she admitted its economic plan must change.
She told a Downing Street press conference: “We need to act now to reassure the markets of our fiscal discipline.
“I have therefore decided to keep the increase in corporation tax that was planned by the previous government.
“This will raise £18 billion per year. It will act as a down payment on our full medium-term fiscal plan which will be accompanied by a forecast from the independent OBR.
“We will do whatever is necessary to ensure debt is falling as a share of the economy in the medium term.”
A change of Chancellor
The press conference came just hours after Liz Truss sacked former Chancellor of the Exchequer Kwasi Kwarteng.
The Prime Minister appointed former foreign secretary Jeremy Hunt as the new Chancellor.
The choice of Mr Hunt, a prominent backer of her rival Rishi Sunak in the Tory leadership contest, will be seen as an attempt to restore stability after weeks of turmoil in the wake of Mr Kwarteng’s mini-budget.
The Prime Minister said in the press conference: “I met the former chancellor earlier today.
“I was incredibly sorry to lose him.
“He is a great friend and he shares my vision to set this country on the path to growth.
“Today, I have asked Jeremy Hunt to take over as Chancellor – he is one of the most experienced and widely respected Government ministers and parliamentarians.
“He shares my convictions and my ambitions for our country.”
"I want to be honest, this is difficult"
Liz Truss said the UK will “get through this storm”.
At her press conference, the Prime Minister said: “I want to be honest, this is difficult, but we will get through this storm. And we will deliver the strong and sustained growth that can transform the prosperity of our country for generations to come.”
Cost of Living crisis
Interest rates and inflation go up
Inflation rose by 8.8% in the 12 months to January 2023, down from 9.2% in December 2022. With interest rates also rising to 4%, those saving money will earn more interest on their finances, whilst those paying mortgages would pay more interest to the bank.
Energy bills
The price of energy went up incredibly as the cost of living crisis hit, with the gas price spike caused largely by the war in Ukraine. The price cap - which is set by an independent regulator to help offset costs onto customers - was set to rise to £3,549 for an average home in October but a price freeze from the government restricted the typical bill to £2,500. That's still an increase of 27% from the previous energy cap and as it's a cap on unit cost, the more energy you use the higher your bill will be.
Food prices
The cost of a weekly shop also has gone up as a result of the cost of living crisis. As a result of the war in Ukraine, a number of products including cooking oils and wheat have been disrupted. This means that several products are now considerably more expensive, driving bills up for customers.
Prices at the pumps
The average cost of petrol has also rose to unprecedented levels. Supply lines for petrol have been thrown into doubt as a result of the war in Ukraine, as Russia is a large export partner for gas, oil and fuel. In April 2022, the average price for a litre of petrol on the forecourt was 160.2p, whilst a litre of diesel would cost 170.5p. By late June 2022 the price had risen to an average of 190.9p for a litre of unleaded and 198.9p for a litre of diesel. In March 2023 the price wass on average of 147.03 in petrol and 167.04 in diesel.
Average cost of filling up a car with petrol hits £100
On 9th June 2022, the average cost of filling up a car with petrol hit £100 for the first time ever. Diesel had already hit that milestone. It comes as the cost of fuel hit a record high of one pound eighty a litre. The 2p rise was the biggest daily jump in 17 years. Prices have dropped by at least 20p per litre since the high point.