Following the sacking of Kwasi Kwarteng as chancellor, We Are Money founding adviser Jonathan Burridge says: “it’s been an utter shambles”.
Earlier today, the former chancellor confirmed he had been sacked by prime minister Liz Truss. Speculation about Kwarteng’s future as chancellor started last night when he ended his trip to the US a day early to fly back to the UK.
Truss has replaced Kwarteng with former health secretary Jeremy Hunt.
Burridge comments: “It is hard to imagine how the Truss administration can come back from such an ill-considered and nationally damaging start.”
Meanwhile, Coreco managing director Andrew Montlake says: “This is officially now a government without a mandate, without a plan and without a clue.”
Montlake adds: “The Conservatives know that Truss will never be able to turn people around after this and that whenever an election is called, they will be annihilated.”
“Their only chance is to install a Sunak and Mordaunt double-act to restore some sense of calm maturity to proceedings to see the country through hard times. This may not be enough, though, as the sense of outrage among the British people will linger for a long time.”
Shaw Financial Services founder Lewis Shaw describes the prime minister as a “pound shop Thatcher with no mandate from the country”.
Shaw, who calls for a general election, says: “We’re scraping the barrel so hard we’re through the bottom. Just think of the poor joiners whose job is to get the spur marks out of the wood panelling in Downing Street.”
“The current administration has no ideas or leadership and has torpedoed our economy.”
In a press conference, following Kwarteng’s sacking, Truss stated: “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.”
“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.”
Truss also announced that corporation tax will rise to 25% as originally planned in April.
This is a notable reversal of the plan to freeze it at 19%, as detailed in last month’s mini-budget.
It is the second major turnaround of a headline policy in said mini-budget, with the mini-budget’s planned cut to the additional tax rate being scrapped earlier this month.
Interactive Investor senior personal finance analyst Myron Jobson comments: “As the business models lenders use to price mortgages are tied to gilt yields, mortgage holders and those seeking to secure a home loan will hope for a return to competitive mortgage deals after mortgages rates spiked by between one and two percentage points in the fallout of the so-called ‘fiscal event’.”
“However, the mortgage marketplace remains precarious for buyers. Mortgage rates are changing on a daily basis so it’s important for buyers and those seeking to remortgage to keep calm and assess their options.”
Alvarez and Marsal managing director Kersten Muller adds: “At the time of the now infamous ‘mini budget’, it looked likely that the UK corporation tax rate cut would be revisited. The expectation was for a middle ground between the current and proposed rate.”
“The increase from 19% to 25% seemed quite high, but the reality remains that the new rate will not be a hugely significant deciding factor on whether businesses want to establish and grow in the UK. It is therefore not surprising that the rate cut has now been reversed.”
“Corporation tax is one of the tax costs businesses have to consider, but the rate does not take into account that some sectors could really benefit from targeted support whilst others are doing well, even in the current environment.”
“More targeted measures like support for green initiatives and capital allowances would be more effective in driving investment and growing the economy.”
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