Chancellor Kwasi Kwarteng’s sacking and PM Liz Truss’s U-turn on corporation tax will not be enough to calm markets and restore investor confidence, the CEO of a leading financial advisory and fintech has warned.
Truss quickly appointed former health secretary Jeremy Hunt as the new Chancellor, confidently declaring that, “parts of our mini-Budget went further and faster than markets expected.”
“After sacking Kwarteng, the Prime Minister used an unscheduled press conference to announce that corporation tax will rise to 25% this spring. The embarrassing U-turn means she is abandoning one of the flagship promises from her recent leadership campaign,” said deVere Group’s Nigel Green.
“The scrapping of her controversial plan sees her revert to the commitment of Rishi Sunak, her campaign rival.”
The deVere CEO said that the sacking of Kwarteng and the humiliating climbdown on corporation tax will not be enough to calm markets and restore investor confidence in UK plc.
“Truss’s previous scrapping of plans, set out in the recent reckless mini-Budget, to axe the 45p tax rate wasn’t enough to reassure febrile markets as we have seen. And this latest U-turn will not be either,” he said.
Green warned that there’s likely to be a brief relief rally in financial markets, but it will not be sustained.
“Because it all smacks of incompetence. There will remain an underlying lack of confidence. After all, Kwarteng was merely the mouthpiece for Truss’s economic agenda.
“He was simply implementing the promises made for weeks by Liz Truss who has the lowest level of satisfaction with the public ever recorded for a British Prime Minister.
“In addition, the Bank of England has been forced to take drastic action to calm markets and the IMF, amongst many others, has weighed in hard against the government’s economic plans.
“This whole sorry debacle has blown a massive hole in investors’ trust in the UK.”
Green concluded that besides a possible nominal relief rally, “I am not convinced the sacrificing of Kwarteng and the latest U-turn on corporation tax will do much to restore investor confidence. The markets will reflect this. It’s too little, too late.”