Breaking News
Investing Pro 0
New Year’s SALE: Up to 40% OFF InvestingPro+ CLAIM OFFER

Analysis: UK's Hunt faces triple threat from debt, recession and Conservative rebels

Economy Oct 25, 2022 12:10PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. British Chancellor of the Exchequer Jeremy Hunt arrives for a Cabinet meeting on Downing Street, as a new prime minister is expected to be announced, in London, Britain, October 25, 2022. REUTERS/Peter Nicholls
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio

By William Schomberg

LONDON (Reuters) - Newly confirmed finance minister Jeremy Hunt must keep investors calm about Britain's debt mountain, avoid causing a deep recession and work out a way to stop the Conservative Party from splintering again - and all of it by next Monday.

Hunt, re-appointed to his job by new Prime Minister Rishi Sunak on Tuesday, is due to announce a budget plan on Oct. 31.

The two men hope it will bury Britain's recent economic policy experiment under former leader Liz Truss that triggered a historic bond market slump and made Truss the shortest-lived prime minister in history.

Hunt, a former foreign and health minister, was rushed in as Truss's new finance minister after she fired her friend and fellow low-tax disciple Kwarteng less than two weeks ago in a bid to appease the markets.

Hunt immediately ripped up Truss and Kwarteng's programme, reversing most of its 45 billion pounds of tax cuts, and he warned of tough decisions ahead to restore Britain's economic credibility.

A sharp fall in borrowing costs over the past week -- 30-year government bond yields fell on Tuesday to their lowest since the day before Truss's "mini-budget" -- has made that job a bit easier by reducing the government's debt interest bill .

Charlie Bean, a former top official at the Office for Budget Responsibility watchdog, said the calmer markets meant Hunt and Sunak faced a hole in the public finances closer to 30 billion pounds a year than 40 billion pounds a couple of weeks ago.

But the scale of the problem remains huge, with health, education and other public services in Britain under huge strain after more than a decade of tough controls on public spending. At the same time, many Conservatives oppose tax increases.

"The crucial thing will be whether Conservative MPs - who are now all talking about unity - when it comes to actually being faced with measures they don't like, are they going to support them or are we going to see them reverting to the chaotic infighting we've seen recently?" Bean told the BBC.

Tensions within the Conservative Party have run high since the 2016 decision by voters to leave the European Union and led to the ousting of Truss and Boris Johnson as leaders this year.


Big budget decisions for next week: whether to revive the social security hike introduced by Sunak when he was Johnson's finance minister and which was ditched by Truss; whether to signal future income tax cuts as Sunak promised in his failed summer Downing Street bid; and where to cut public spending.

The severe cost-of-living crisis caused by 10% inflation is also putting pressure on the new government to raise welfare and pensions by double-digits too, while pay strikes are breaking out across the public sector.

Just as important in the short term, Hunt and Sunak must decide what to do with Britain's hugely expensive energy price cap for homes and businesses.

Hunt has cut the duration of the scheme to six months - which will still cost an estimated 60 billion pounds - from the two years promised by Truss. But he has yet to say how he will honour his pledge to protect the most vulnerable after April.

The cap's future will be key for the Bank of England as it prepares to raise interest rates again on Nov. 3 when it will also signal its plans further ahead.

The combination of higher energy bills from April, more rate hikes and a slower world economy means Britain could be in recession until the end of next year, economists say.

Ratings agency S&P Global (NYSE:SPGI) Ratings forecast on Tuesday that Britain's economy would contract by 0.6% in 2023.

Faced with that bleak outlook, the head of a big employers' groups urged Hunt and Sunak not to return to the relentless focus on spending restraint and tax measures of the 2010s under the Conservatives, and to announce pro-growth measures.

"The country could end up in a similar doom loop where all you have to do is keep coming back every year to find more tax rises and more spending cuts because you've got no growth" Confederation of British Industry Director General Tony Danker told BBC radio.

Analysis: UK's Hunt faces triple threat from debt, recession and Conservative rebels

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email