By Geoffrey Smith
Investing.com — The U.K.’s new Chancellor of the Exchequer, Jeremy Hunt, is to announce new tax and spending plans later Monday, two weeks earlier than foreseen, in an effort to stop the rout in British government bonds caused by his predecessor.
Hunt is expected to announce a more thorough reversal of the unfunded tax cuts pushed by Kwasi Kwarteng and Prime Minister Liz Truss, which had pushed the to an all-time low and led to a sharp rise in bond yields and mortgage costs.
The Treasury said in a statement that Hunt’s announcement will be followed by a full statement to the House of Commons. The pound rose over 1% to $1.1284 in early trading in response to the news.
Over the weekend, various U.K. media reported that the Office for Budget Responsibility had warned the Treasury that Kwarteng’s initial plans would have created a funding gap of over 70 billion pounds by 2027.
Kwarteng was dismissed by Truss on Friday as she tried to salvage a premiership that is less than two months old by reinstating a planned increase in corporate income tax that Kwarteng had scrapped. However, the Gilt market had continued to sell off, after Truss stood by most of Kwarteng’s other measures.