MNI BRIEF: UK's Hunt Budget Reversal Saves GBP32 Bln Annually

The UK will ditch many elements of its September Growth Plan, reversing the decision to implement a string of tax cuts in coming months, and saving the government GBP32 billion in annual costs, new Chancellor of the Exchequer Jeremy Hunt said Monday.

The plan to cut the basic rate of income tax to 19p will be abandoned, though it remains a longer-term aim of the Conservatives, Hunt said.

Saying the country needed “confidence and stability”, Hunt said the only tax cuts to go ahead were those already going through Parliament -- the reversal of April’s National Insurance hike and the cut in stamp duty on house purchases.

Hunt’s biggest cost-saving measure was his decision to keep the energy price cap in place just until April 2023 and not for two years. More targeted plans for households and business would be put in place from April following a Treasury review.

Hunt said the announcement outside Parliament had been agreed with the speaker of the House of Commons, adding that further details would be unveiled later today. Government bond markets have taken the shift in policy well, with indicated government borrowing costs lower across the curve. The yield on the benchmark 10-year was last at 3.96%, down 35bps on the day, with the 30-year at 4.39%, down 37 bps.