Just three weeks after the phrase was coined, so-called Trussonomics is no more.
Liz Truss’s ambitious plan for a high-growth, high-wage, low-tax economy didn’t even get off the launch pad. The new Chancellor Jeremy Hunt concedes that mistakes were made in how it was delivered.
In a remarkably frank interview with BBC Radio 4’s Today programme this morning, he admitted there would be difficult decisions ahead.
Some taxes would now go up, he said, and others may not come down as quickly as people want.
Spending will not rise as fast as previously planned. Hunt will now ask all government departments to look for efficiency savings – and said even health and defence are not immune.
He also admitted that “flying blind” was another big error. That was a reference to the failure of his predecessor to submit his plan to be stress-tested by the independent Office for Budget Responsibility (OBR) to make sure the sums added up.
The reaction from the business world has been mixed. One investment fund manager described the reversal in policy as a turning point and described Jeremy Hunt as someone the markets could trust.
But the chairman of supermarket giant Asda, Lord Stuart Rose, described Liz Truss as a “busted flush”, who in his view cannot bring stability to the economy.
The judgment from the markets will come when they re-open at 08:00 on Monday. It will be the first working day since the Bank of England stopped buying government bonds to try and stabilise the pension market. The price of government borrowing was already creeping up again at close-of-play on Friday.
Jeremy Hunt said he had been given a clean slate to re-work the mini-budget. He now has two weeks to make the figures work before delivering his economic plan on 31 October.
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Source: Sky news