Bank of England headquarters - City of London

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Investors continue to breathe a sigh of relief as some U.K. drama that hung over financial markets appeared to be resolved. New Chancellor of the Exchequer Chief Jeremy Hunt has reversed nearly all the government’s proposed tax cuts, which had caused an uproar since being unveiled last month. A broad rally in sterling, gilts and stocks ensued, though there are reports that the Bank of England may still delay the unwinding of QE, by postponing the sale of billions of pounds of government bonds until the climate becomes calmer.

Thought bubble: The near total U-turn on the “mini-budget” and “growth plan” calls into question how much longer the new prime minister will be able to survive in government. The tax cuts were part of Truss’s signature economic agenda that was at the core of her run for No. 10 Downing Street. High-profile Conservative Party members, including Hunt, are now said to be angling for the leadership, though the fact that the Tories cannot rally around one single candidate might keep her in the office for longer.

“I’m sticking around because I was elected to deliver for this country, and that is what I am determined to do,” Truss told the BBC. “I do want to accept responsibility and say sorry for the mistakes that have been made. I wanted to act to help people with their energy bills to deal with the issue of high taxes, but we went too far and too fast.”

Elsewhere: First Minister Nicola Sturgeon is utilizing the recent chaos to attempt a fresh push for Scottish independence. A newly released economic blueprint demonstrates how the U.K. constituent could transition to its own currency (Scottish pound) managed by a new central bank, and how it would seek to rejoin the European Union. Scots last voted 55% to 45% to remain in the United Kingdom in 2014, but that was before Brexit. The U.K. government has so far refused to grant Sturgeon another referendum in October 2023, but she is pursuing the plan in the Supreme Court by referring to it as a democratic right.


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