London Daily

Focus on the big picture.
Monday, Oct 06, 2025

UK to turn page on 'Trussonomics' with budget plan

UK to turn page on 'Trussonomics' with budget plan

Finance minister Jeremy Hunt will bury Britain's failed "Trussonomics" experiment on Thursday by cutting spending and raising taxes, moves that he and Prime Minister Rishi Sunak say are needed to restore investor confidence.

Britain is probably already in a recession with 11% inflation creating a cost-of-living crisis. It is the only Group of Seven nation yet to recover its pre-pandemic size having previously suffered a decade of near-stagnant income growth.

But Hunt has warned of more pain in his budget statement that will represent an abrupt reversal of policy from the unfunded tax cuts promised by former Prime Minister Liz Truss less than two months ago.

Her government's short-lived "mini-budget" on Sept. 23 sent the pound slumping to an all-time low against the U.S. dollar, threatened chaos in the housing market, and eventually forced Truss to quit after just 50 days in Downing Street.

Investors took comfort when Hunt replaced Kwasi Kwarteng as chancellor of the exchequer in mid-October and immediately started steering the economy back towards a more orthodox path.

He and Sunak say they must now go further.

"Stability has returned to the United Kingdom but that's because the expectation is that the government will make those difficult but necessary decisions," Sunak said this week.

Critics say a return to austerity is unnecessary, will hurt millions of households and will deepen the expected recession.

But Hunt says he can only slow the rise in borrowing costs if he can show investors that Britain's 2.45 trillion-pound ($2.91 trillion) debt mountain will start to fall as a share of economic output. Beating inflation is key to that.

"The Bank of England has my wholehearted support in its mission to defeat inflation... but we need fiscal and monetary policy to work together," Hunt said in excerpts of his budget speech released by the finance ministry.

"We are taking a balanced path to stability," he said. "But it depends on taking difficult decisions now."


TAX RISES AND SPENDING CUTS


Britain's government is aiming for more than 50 billion pounds of annual savings by five years' time - equivalent to about 2% of annual economic output. How soon spending cuts and tax rises come will be key for the short-term economic outlook.

Hunt risks reviving tensions within the ruling Conservative Party, many of whose members were already upset at the scale of tax increases he announced when finance minister.

Hunt is expected to extend a freeze on the thresholds at which people start to pay income tax, dragging more people into the taxman's net. He might cut the threshold for paying the higher rate of income.

News reports have said Hunt also plans to bring in more revenues from dividend and capital gains taxes while sources have said he is considering a big increase in a windfall tax on oil and gas firms and extending it to power generation firms.

New spending cuts could add to the public's frustration with over-stretched public services, ranging from a health system bogged down in backlogs to dilapidated public housing.

Adjusted for inflation, budgets have been cut below 2010 levels for many departments with transport spending about 40% down and justice 20% beneath its level 12 years ago, the Institute for Fiscal Studies think-tank estimates.

Opinions polls show the opposition Labour Party has a big lead in opinion polls ahead of an expected election in 2024.

The budget statement will be accompanied by forecasts from the Office for Budget Responsibility which are likely to echo the BoE's message that Britain is heading for a long recession.

Hunt has said he will address one of the drags on Britain's economy which is a shortage of workers in the labour market.

Newsletter

Related Articles

0:00
0:00
Close
Munich Airport Reopens After Second Drone Shutdown
France Names New Government Amid Political Crisis
Trump Stands Firm in Shutdown Showdown and Declares War on Drug Cartels — Turning Crisis into Opportunity
Surge of U.S. Billionaires Transforms London’s Peninsula Apartments into Ultra-Luxury Stronghold
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Jeff Bezos Calls AI Surge a ‘Good’ Bubble, Urges Focus on Lasting Innovation
Japan’s Ruling Party Chooses Sanae Takaichi, Clearing Path to First Female Prime Minister
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Taylor Swift’s ‘Showgirl’ Launch Extends Billion-Dollar Empire
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
FBI Removes Agents Who Kneeled at 2020 Protest, Citing Breach of Professional Conduct
Trump Alleges ‘Triple Sabotage’ at United Nations After Escalator and Teleprompter Failures
Shock in France: 5 Years in Prison for Former President Nicolas Sarkozy
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
BNP Paribas Abandons Ban on 'Controversial Weapons' Financing Amid Europe’s Defence Push
Typhoon Ragasa Leaves Trail of Destruction Across East Asia Before Making Landfall in China
The Personality Rights Challenge in India’s AI Era
Big Banks Rebuild in Hong Kong as Deal Volume Surges
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Arnault Denounces Proposed Wealth Tax as Threat to French Economy
Study Finds No Safe Level of Alcohol for Dementia Risk
Denmark Investigates Drone Incursion, Does Not Rule Out Russian Involvement
Lilly CEO Warns UK Is ‘Worst Country in Europe’ for Drug Prices, Pulls Back Investment
Nigel Farage Emerges as Central Force in British Politics with Reform UK Surge
Disney Reinstates ‘Jimmy Kimmel Live!’ after Six-Day Suspension over Charlie Kirk Comments
U.S. Prosecutors Move to Break Up Google’s Advertising Monopoly
×