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18th November 2022
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“A week is a long time in politics,” as Labour Prime Minister Harold Wilson famously said. What, then, is two months? Or to be more exact, 55 days?

On 6th September, Liz Truss, having defeated Rishi Sunak in the ballot of Conservative members, became Prime Minister. She duly appointed Kwasi Kwarteng – a man dubbed Truss’s ‘political soulmate’ by some of the press – as her new Chancellor.

On Friday September 23rd, Kwarteng presented his ‘fiscal event’ to the Commons. It marked a complete change of direction from the Treasury orthodoxy of previous Chancellors such as George Osborne, Philip Hammond and Sunak himself. Growth was prioritised, as Kwarteng unveiled the biggest tax cuts in half a century.

‘At last! A True Tory Budget,’ was the Mail’s headline. The right-wing think tanks were unanimous in their praise. But several papers and pundits described the moves as a gamble: ‘Truss’s great tax gamble,’ was the Times’ headline.

It was a gamble which didn’t pay off for the Chancellor and his boss. As Kwarteng finished his speech, the pound fell below $1.10 for the first time since 1985. As we wrote our report on the fiscal event for clients, the pound was trading at $1.08, having at one point touched $1.03. The Bank of England was forced to step in and the fate of the Chancellor and Prime Minister was effectively sealed. Kwarteng resigned on October 14th – to be replaced by Jeremy Hunt – and Truss followed ten days later. This time there was no leadership election: former Prime Minister Boris Johnson reportedly had enough backers among MPs but withdrew from the race, leaving Rishi Sunak as the only candidate.

A second fiscal event had been planned for Halloween – October 31st. Given the tax rises and spending cuts which had been widely trailed, that would have been a headline writer’s dream. In the event, the new Chancellor decided to push it back to November 17th and upgrade it to a full Autumn Statement. He was, he said, prepared to make “politically embarrassing” choices – and insisted that the delay to the Statement was the best course of action.

Download full report here


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