Liz Truss did not think that spending cuts would be a major part of her agenda. She and her first chancellor, Kwasi Kwarteng, were confident that markets, having lent Britain billions of pounds to cover the cost of the lockdowns, would be more than happy to do the same to transform the economy. Their argument was, as it turned out, calamitously wrong. The miscalculation cost Kwarteng his job and the Prime Minister her power.
Truss’s new Chancellor, Jeremy Hunt, has dismantled almost all of her plans. ‘Trussonomics’ has been snuffed out. This temporarily calmed the markets. But abandoning tax cuts – as painful as it was – will soon prove to have been the easier part of the job. The real test comes on 31 October, when Hunt must reveal exactly how he plans to get public spending under control.
With Hunt rolling back almost all of the mini-Budget, and suspending cuts to the basic rate of tax ‘indefinitely’, the Treasury estimates it has found £32 billion worth of revenue to help account for the £60-70 billion black hole the OBR is expected to announce at the end of the month.
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