Nothing is inevitable in politics, but if the markets are expecting a U-turn and there isn’t one, then the situation could get worse both politically and economically for the prime minister.
I don’t think we’re going to see a complete unpicking of the mini-budget from last month but, as we’ve been hearing, one of the possible U-turns would be over corporation tax.
Rishi Sunak wanted to put corporation tax up from 19% to 25% from next year, and it was a central plank of Liz Truss’s campaign during the summer to become Conservative leader to ditch that tax rise.
There is speculation she will put it up a little bit – perhaps not the full amount that Sunak was suggesting. If there is a U-turn at all, certainly that may help steady nerves in the market but politically it could be very damaging.
There are now questions about who will be in charge of economic policy. Is it Chancellor Kwasi Kwarteng, who is returning early from the IMF meeting in Washington, or is it No 10?
The decisions to be taken on the economy – and the reaction to them – could determine whether Truss’s policies and her premiership, can survive until the next election.
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Source: BBC.com