London Daily

Focus on the big picture.
Thursday, Oct 16, 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
Australia’s Wedgetail Spies Aid NATO Response as Russian MiGs Breach Estonian Airspace
McGowan Urges Chalmers to Cut Spending Over Tax Hike to Close $20 Billion Budget Gap
Victoria Orders Review of Transgender Prison Placement Amid Safety Concerns for Female Inmates
U.S. Treasury Mobilises New $20 Billion Debt Facility to Stabilise Argentina
French Business Leaders Decry Budget as Macron’s Pro-Enterprise Promise Undermined
Trump Claims Modi Pledged India Would End Russian Oil Imports Amid U.S. Tariff Pressure
Surging AI Startup Valuations Fuel Bubble Concerns Among Top Investors
Australian Punter Archie Wilson Tears Up During Nebraska Press Conference, Sparking Conversation on Male Vulnerability
Australia Confirms U.S. Access to Upgraded Submarine Shipyard Under AUKUS Deal
“Firepower” Promised for Ukraine as NATO Ministers Meet — But U.S. Tomahawks Remain Undecided
Brands Confront New Dilemma as Extremists Adopt Fashion Labels
The Sydney Sweeney and Jeans Storm: “The Outcome Surpassed Our Wildest Dreams”
Erika Kirk Delivers Moving Tribute at White House as Trump Awards Charlie Presidential Medal of Freedom
British Food Influencer ‘Big John’ Detained in Australia After Visa Dispute
ScamBodia: The Chinese Fraud Empire Shielded by Cambodia’s Ruling Elite
French PM Suspends Macron’s Pension Reform Until After 2027 in Bid to Stabilize Government
Orange, Bouygues and Free Make €17 Billion Bid for Drahi’s Altice France Telecom Assets
Dutch Government Seizes Chipmaker After U.S. Presses for Removal of Chinese CEO
Bessent Accuses China of Dragging Down Global Economy Amid New Trade Curbs
U.S. Revokes Visas of Foreign Nationals Who ‘Celebrated’ Charlie Kirk’s Assassination
AI and Cybersecurity at Forefront as GITEX Global 2025 Kicks Off in Dubai
DJI Loses Appeal to Remove Pentagon’s ‘Chinese Military Company’ Label
EU Deploys New Biometric Entry/Exit System: What Non-EU Travelers Must Know
Australian Prime Minister’s Private Number Exposed Through AI Contact Scraper
Ex-Microsoft Engineer Confirms Famous Windows XP Key Was Leaked Corporate License, Not a Hack
China’s lesson for the US: it takes more than chips to win the AI race
Australia Faces Demographic Risk as Fertility Falls to Record Low
California County Reinstates Mask Mandate in Health Facilities as Respiratory Illness Risk Rises
Israel and Hamas Agree to First Phase of Trump-Brokered Gaza Truce, Hostages to Be Freed
French Political Turmoil Elevates Marine Le Pen as Rassemblement National Poised for Power
China Unveils Sweeping Rare Earth Export Controls to Shield ‘National Security’
The Davos Set in Decline: Why the World Economic Forum’s Power Must Be Challenged
France: Less Than a Month After His Appointment, the New French Prime Minister Resigns
Hungarian Prime Minister Viktor Orbán stated that Hungary will not adopt the euro because the European Union is falling apart.
Sarah Mullally Becomes First Woman Appointed Archbishop of Canterbury
Mayor in western Germany in intensive care after stabbing
Australian government pays Deloitte nearly half a million dollars for a report built on fabricated quotes, fake citations, and AI-generated nonsense.
US Prosecutors Gained Legal Approval to Hack Telegram Servers
Macron Faces Intensifying Pressure to Resign or Trigger New Elections Amid France’s Political Turmoil
Standard Chartered Names Roberto Hoornweg as Sole Head of Corporate & Investment Banking
UK Asylum Housing Firm Faces Backlash Over £187 Million Profits and Poor Living Conditions
UK Police Crack Major Gang in Smuggling of up to 40,000 Stolen Phones to China
BYD’s UK Sales Soar Nearly Nine-Fold, Making Britain Its Biggest Market Outside China
Trump Proposes Farm Bailout from Tariff Revenues Amid Backlash from Other Industries
FIFA Accuses Malaysia of Forging Citizenship Documents, Suspends Seven Footballers
Latvia to Bar Tourist and Occasional Buses to Russia and Belarus Until 2026
A Dollar Coin Featuring Trump’s Portrait Expected to Be Issued Next Year
Australia Orders X to Block Murder Videos, Citing Online Safety and Public Exposure
Three Scientists Awarded Nobel Prize in Medicine for Discovery of Immune Self-Tolerance Mechanism
OpenAI and AMD Forge Landmark AI-Chip Alliance with Equity Option
×