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| Two thirds of tax cuts from mini-budget reversed | Two thirds of tax cuts from mini-budget reversed |
| (38 minutes later) | |
| The government will reverse "almost all" of the tax cuts announced in last month's mini-budget in an emergency move aimed at calming investors. | The government will reverse "almost all" of the tax cuts announced in last month's mini-budget in an emergency move aimed at calming investors. |
| New chancellor Jeremy Hunt said the strategy, which includes keeping income tax at current levels, would bring in £32bn. | |
| The move comes after economists warned the original plans would leave a £60bn black hole in the public finances. | |
| Mr Hunt said his priority was to restore "economic stability". | Mr Hunt said his priority was to restore "economic stability". |
| The government's mini-budget on 23 September sparked alarm among investors. The then chancellor Kwasi Kwarteng announced huge tax cuts on top of a plan to subsidise energy prices for two years. He did not give any detail on how the tax cuts and extra spending would be paid for. | |
| "At a time when markets are rightly demanding commitments to sustainable public finances, it is not right to borrow to fund this tax cut," added Mr Hunt, referring to the plan to Mr Kwarteng's plan bring down the basic rate of income tax by 1p. | |
| Mr Hunt noted that the instability on financial markets had a wider impact affecting "the prices of things in shops, the cost of mortgages and the values of pensions". | |
| Immediately after the mini-budget, investors began demanding higher rates of interest to lend to the government as the UK was deemed a higher risk investment and borrowing costs surged to worrying levels. | Immediately after the mini-budget, investors began demanding higher rates of interest to lend to the government as the UK was deemed a higher risk investment and borrowing costs surged to worrying levels. |
| The turmoil forced pension funds to sell bonds due to concerns over their solvency, and threatened to create a downward spiral in bond prices as more were offloaded which left some funds close to collapse. | The turmoil forced pension funds to sell bonds due to concerns over their solvency, and threatened to create a downward spiral in bond prices as more were offloaded which left some funds close to collapse. |
| The Bank of England was forced to step in to buy bonds to try and stabilise their price. | The Bank of England was forced to step in to buy bonds to try and stabilise their price. |
| The turmoil also fed through to the mortgage market, where hundreds of products have been suspended due to concerns about how to price these long-term loans. | The turmoil also fed through to the mortgage market, where hundreds of products have been suspended due to concerns about how to price these long-term loans. |
| The Institute for Fiscal Studies (IFS) warned last week that that the chancellor would need to make "big and painful" spending cuts to put the country's finances on a sustainable path. | The Institute for Fiscal Studies (IFS) warned last week that that the chancellor would need to make "big and painful" spending cuts to put the country's finances on a sustainable path. |
| The think tank predicted that with a weaker economy and promised tax cuts, there would be a large shortfall in revenue. | The think tank predicted that with a weaker economy and promised tax cuts, there would be a large shortfall in revenue. |
| It calculated the government would have to spend £60bn a year less by 2026-27. | It calculated the government would have to spend £60bn a year less by 2026-27. |