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☆ U.K. Treasury Chief Jeremy Hunt Reverses Nearly All Tax Plans to Reassure Markets
▼ + stars: | 2022-10-17 | by ( Max Colchester | Paul Hannon | ) www.wsj.com time to read: 1 min

LONDON—New U.K. Treasury Chief Jeremy Hunt said Monday he was reversing nearly all the government’s proposed tax cuts and would pare back an energy price cap as he moves to reassure markets about the stability of the nation’s finances. Mr. Hunt, who took over on Friday after Prime Minister Liz Truss fired his predecessor Kwasi Kwarteng, has acted quickly in his first days on the job to try to repair the damage to Britain’s standing among investors by taking steps to shore up public finances after weeks of turmoil on U.K. financial markets.

☆ European shares edge higher as investors await new UK fiscal plan
▼ + stars: | 2022-10-17 | by ( Amruta Khandekar | ) www.reuters.com time to read: +3 min

The region-wide STOXX 600 index (.STOXX) was up 0.3%, extending gains for a third straight session. European equities have suffered losses in the recent weeks as investors fret about the prospects of a recession from aggressive central bank actions to tame inflation. Most STOXX 600 sectors were trading up, with energy stocks (.SXEP) up 0.6% as oil prices rose driven by hopes of better demand from China. The bank has agreed to pay $495 million to settle a case brought against it in the United States. read moreNel (NEL.OL) rose 7.3% after the Norwegian hydrogen company received a NOK 600 million ($56.4 million) order from Woodside Energy (WDS.AX) for a U.S. hydrogen project.

☆ UK finance minister seeks to stem bond rout by rushing forward tax plan
▼ + stars: | 2022-10-17 | by ( William Schomberg | ) www.reuters.com time to read: +4 min

"The chancellor will make a statement later today, bringing forward measures from the Medium-Term Fiscal Plan that will support fiscal sustainability," the finance ministry said. Register now for FREE unlimited access to Reuters.com RegisterSterling was up about 1% against the dollar in trading in Asia. Hunt met Truss over the weekend to overhaul her original economic proposals. No chancellor should seek to do that," the former foreign and health minister told BBC television in an interview broadcast on Sunday. Goldman Sachs said on Sunday it expected Britain's economy to shrink by 1.0% in 2023, a more severe contraction than its previous forecast of a 0.4% shrinkage, as Truss's tax cuts were reversed.

☆ UK PM Truss unable to appear in parliament on Kwarteng sacking - minister
▼ + stars: | 2022-10-17 | by ( ) www.reuters.com time to read: +2 min

LONDON, Oct 17 (Reuters) - Prime Minister Liz Truss did not appear in parliament on Monday to answer a question about why the former finance minister Kwasi Kwarteng was sacked last week, drawing accusations from the opposition Labour Party she was "scared of her own shadow". "The PM is detained on urgent business," Mordaunt said, drawing laughter from opposition party lawmakers. read more"It is time for leaders to lead, but where is the Prime Minister?" "I guess under this Tory government everybody gets to be prime minister for 15 minutes." "The decision taken by our prime minister would have been a very tough one, politically and personally," she said.

☆ Wall St futures higher with focus on earnings
▼ + stars: | 2022-10-17 | by ( ) www.reuters.com time to read: +2 min

SummarySummary Companies Futures: Dow 0.78%, S&P 0.93%, Nasdaq 1.12%Oct 17 (Reuters) - U.S. stock index futures were higher on Monday, after a roller-coaster week, as investors focused on the third-quarter earnings season to assess the impact of decades-high inflation and rising interest rates on corporate profit. Tesla Inc (TSLA.O), Netflix (NFLX.O) and Johnson & Johnson (JNJ.N) are also expected to report their results later in the week. Analysts now expect profit for S&P 500 companies to have risen just 3.6% from a year ago, much lower than an 11.1% increase expected at the start of July, according to Refinitiv IBES data. ET, Dow e-minis were up 231 points, or 0.78%, S&P 500 e-minis were up 33.5 points, or 0.93%, and Nasdaq 100 e-minis were up 120.75 points, or 1.12%. Investors now await another test for gilts from a new tax proposal due later in the day from Kwarteng's successor Jeremy Hunt.

☆ New UK finance minister rips up Truss’ economic plan in stunning policy reversal
▼ + stars: | 2022-10-17 | by ( Julia Horowitz | ) edition.cnn.com time to read: +5 min

The stunning reversal would raise £32 billion ($36 billion), he said. “No government can control markets, but every government can give certainty about the sustainability of public finances,” Hunt said. “The United Kingdom will always pay its way.”The moves represent a gutting of Prime Minister Liz Truss’ flagship policies and leave her in a perilous political position. On Friday, Truss fired Kwasi Kwarteng, her previous finance minister, and reinstated a big tax hike on corporations. “A central responsibility for any government is to do what’s necessary for economic stability,” Hunt said.

☆ UK Prime Minister Liz Truss faces serious pressure to resign after failed budget
▼ + stars: | 2022-10-17 | by ( Hannah Ward-Glenton | ) www.cnbc.com time to read: +1 min

LONDON — U.K. Prime Minister Liz Truss is facing calls to resign from within her own Conservative Party just six weeks after entering Downing Street. Truss and her former Finance Minister Kwasi Kwarteng announced a fiscal package – a so-called "mini-budget" – on Sept. 23. The latest plans were announced Monday by Jeremy Hunt, just three days into his tenure as finance minister. Angela Richardson, Conservative MP for Guildford, said it was "no longer tenable" for Truss to remain as prime minister, speaking on Times Radio on Monday, while Jamie Wallis, Conservative MP for Bridgend, wrote to the prime minister telling her to resign. "I ask you to stand down as Prime Minister as I believe you no longer hold the confidence of the country or the parliamentary party," Wallis' letter said.

☆ FTSE 100 climbs ahead of Hunt's fiscal plans
▼ + stars: | 2022-10-17 | by ( Sruthi Shankar | ) www.reuters.com time to read: +2 min

The blue-chip FTSE 100 index (.FTSE) gained 0.5%, while the domestically focussed FTSE 250 index (.FTMC) climbed 0.6%. The pound jumped 0.8% and government bonds rallied ahead of Hunt's announcement at 1000 GMT, which is expected to detail plans to raise taxes and spend lesser than previously planned. read more read moreRegister now for FREE unlimited access to Reuters.com Register"The markets have reacted positively to Hunt's expedited timeline, which alleviates some of the fiscal uncertainty," said Victoria Scholar, head of investment at Interactive Investor. Truss on Friday reversed some of the tax cut measures, and replaced Kwasi Kwarteng with Hunt. Meanwhile, the Bank of England (BoE) on Friday concluded its emergency bond purchases aimed at supporting the gilts market.

"It is really not the right time to experiment with fiscal policy," AXA chief economist Gilles Moec said about the UK's moves, assessing that Monday's U-turn may have appeased "the bond vigilantes for now". The term, bond vigilantes, refers to debt investors imposing fiscal discipline on profligate governments by forcing their borrowing costs higher. Ed Yardeni, who coined the bond vigilantes term in the early 1980s, penned a blog post saying "They're Baaaack!" Even U.S. President Joe Biden was speaking the bond vigilante's language at the weekend, noting he wasn't the only one that thought the UK plan was a "mistake". "This is probably the biggest example in practice of the bond vigilantes activity," said Antonio Cavarero, head of investments at Generali Insurance Asset Management.

☆ UK Prime Minister Truss says 'sorry' for mistakes, but 'I'm sticking around'
▼ + stars: | 2022-10-17 | by ( ) www.reuters.com time to read: +2 min

LONDON, Oct 17 (Reuters) - Britain's Prime Minister Liz Truss apologised for "mistakes" in her programme that caused investor confidence to evaporate and her poll ratings to plunge before nearly all of it was finally shredded on Monday, but said she would not step down. "I do want to accept responsibility and say sorry for the mistakes that have been made," Truss told the BBC. read moreAsked if she was now prime minister in name only, Truss said she had appointed Hunt because she knew she had to change direction. Truss and Kwarteng attempted to upend British fiscal policy by unveiling 45 billion pounds of unfunded tax cuts last month to snap the economy out of stagnation. "I'm sticking around because I was elected to deliver for this country," she said.

☆ The pound rises after UK's new finance minister speeds up announcement of tax and spending plans to Monday
▼ + stars: | 2022-10-17 | by ( Huileng Tan | Karen Friar | ) www.businessinsider.com time to read: +4 min

The UK's finance minister Jeremy Hunt will lay out details of some of the government's tax plans Monday. The policy details come two weeks early, after abrupt tax U-turns and the sacking of Hunt's predecessor. The pound rose Monday, after weeks where the tax plans roiled markets as investors fretted about stability. The turmoil prompted Nobel laureate Paul Krugman to say the UK markets were "behaving like those of a developing country." That and political pressure on Prime Minister Liz Truss has led to a series of U-turns on the tax plans in recent days.

Just three months after he all but admitted his ambitions to get the top job in politics had ended, Hunt was appointed finance minister, propelled into the job to clean up the market mess created by his boss, Prime Minister Liz Truss. "No one camp of the other candidates who went further can feel too sore and bad about not having their man or woman as prime minister," he told BBC radio. In a room on the so-called Committee corridor in parliament, Hunt told colleagues that tough decisions would have to be made to balance the books. Another joked: "It was good to hear from the new prime minister." Some are still not convinced his latest appointment will bring him the prize he has pursued for so long - to become prime minister.

☆ British pound rises as new UK finance minister brings forward policy announcements to today
▼ + stars: | 2022-10-17 | by ( Hannah Ward-Glenton | ) www.cnbc.com time to read: +2 min

LONDON — Sterling rose against the dollar on Monday morning after new U.K. Finance Minister Jeremy Hunt announced he would deliver parts of his medium-term fiscal plan later in the session. The pound was up nearly 1% to $1.1288 by early Monday morning, extending gains after the statement from the U.K. Treasury. The decision follows a dramatic day in British politics on Friday, which included big fiscal U-turns from Prime Minister Liz Truss and the sacking of Finance Minister Kwasi Kwarteng. Hunt said over the weekend that his priority as finance minister is growth, much like his predecessor, but he highlighted it would be "underpinned by stability." U.K. bonds saw a sharp sell-off and the pound hit a record low in the days afterward.

The blue-chip FTSE 100 index (.FTSE) ended 0.9% higher, while the domestically focussed FTSE 250 index (.FTMC) closed 2.8% up. Both the indexes logged their third-straight day of gains, with the latter up more than 5%. Under the new policy, most of Truss's 45 billion pounds of unfunded tax cuts will go and a two-year energy support scheme for households and businesses - expected to cost well over 100 billion pounds - will now be curtailed in April. Register now for FREE unlimited access to Reuters.com RegisterHunt, who replaced Kwasi Kwarteng, said halting the planned tax cuts would raise 32 billion pounds ($36 billion) every year. Traders are now seeing a 68.2% chance of a 100 basis points hike at the central bank's Nov. 3 meeting.

☆ 'How's Brexit going?' British politics mocked at home and abroad
▼ + stars: | 2022-10-17 | by ( Gavin Jones | ) www.reuters.com time to read: +4 min

New British finance minister Jeremy Hunt will set out tax and spending measures on Monday, two weeks earlier than scheduled, as he races to stem a dramatic loss of investor confidence in Prime Minister Liz Truss's government. read more"How's Brexit going?" read moreEven Britain's staunchly conservative newspaper the Telegraph, which backed the Brexit referendum, acknowledged in a column on Sunday that its economic goals had failed. "The UK example of how quickly and aggressively markets can turn on you, is likely to keep Italian policy cautious. I am sure Rome is watching carefully what is happening in the UK," one senior euro zone official said.

CNN —British Prime Minister Liz Truss on Monday apologized for her controversial mini-budget that crashed the country’s currency, rattled financial markets and led to her firing her finance minister and closest political ally. The moves amount to a gutting of Truss’ flagship “growth plan” and leave her in a perilous political position. “We have to make sure though, that we have economic stability, and that has to be my priority as prime minister. Truss added it was “painful” to sack her “friend” Kwarteng as finance minister but said she stood by her decision. She also apologized to her party’s lawmakers for her “mistakes” but said she would “move forward” and focus on delivering for the UK.

☆ Massive fiscal U-turn leaves UK in political funk
▼ + stars: | 2022-10-17 | by ( Pierre Briancon | ) www.reuters.com time to read: +4 min

By the tax year ending in April 2027 this should help the government claw back 32 billion pounds of the 45 billion pounds a year Kwarteng and Truss had planned. Beyond that, the scheme, which the government had estimated might cost some 60 billion pounds over six months, will become less generous. The pound strengthened against the U.S. dollar while yields on 10-year UK government bonds declined by nearly 45 basis points. But they remain at 12-year highs, suggesting that the UK has much to do to regain credibility with global investors. Government spending cuts will also be required to narrow a hole in public finances that the Sunday Times reported was as big as 72 billion pounds ($81 billion).

☆ Morning Bid: In Hunt we Truss
▼ + stars: | 2022-10-17 | by ( ) www.reuters.com time to read: +2 min

While insisting Truss, who is fighting to keep her job, is indeed in charge, Hunt catalogued the mistakes made in the past few weeks and signalled that tighter spending controls and some tax rises are on the way. Register now for FREE unlimited access to Reuters.com Register"I think what the country wants now is stability." Monday will test all sides in the UK gilt markets now that the central bank's emergency bond-buying programme has concluded. Hunt has already spoken to the Bank of England Governor Andrew Bailey, agreeing on the need to repair the public finances. Sterling has nudged higher after Truss reversed some of her government's economic plan, not long after she sacked Kwasi Kwarteng as finance minister.

☆ Sterling rebounds on UK fiscal policy U-turn; yen struggles
▼ + stars: | 2022-10-17 | by ( ) www.cnbc.com time to read: +3 min

In this photo illustration, British GDP £1 coins and bank notes are pictured in Bath, England. The news came hours after she sacked former finance minister Kwasi Kwarteng, with Jeremy Hunt replacing him. All eyes are now on how the UK government bond market will trade, after the Bank of England on Friday concluded its emergency gilt market support. The U.S. dollar index , which measures the greenback against a basket of currencies including the yen, firmed at 113.02. Elsewhere, the euro gained 0.26% to $0.9748, while the Australian and New Zealand dollars bounced mildly from recent losses.

☆ Britain's political and market turmoil
▼ + stars: | 2022-10-17 | by ( ) www.reuters.com time to read: +2 min

People walk through the City of London financial district during rush hour in London, Britain, October 3, 2022. Following is a snapshot of related events, comments and explanations:Register now for FREE unlimited access to Reuters.com RegisterWHAT'S BEHIND THE CRISIS? * The Bank of England was forced into emergency bond-buying to stem a sharp sell-off in Britain's 2.1 trillion pound ($2.3 trillion) government bond market that threatened to wreak havoc in the pension industry and increase recession risks. * The BoE interventions have highlighted a growing segment of Britain's pensions sector - liability-driven investment. MARKET REACTION* Long-dated British government bonds rallied on Monday.

☆ UK gilts rally ahead of expected new U-turn on fiscal plans
▼ + stars: | 2022-10-17 | by ( ) www.reuters.com time to read: +2 min

LONDON, Oct 17 (Reuters) - Long-dated British government bonds rallied on Monday ahead of a statement from new finance minister Jeremy Hunt who is expected to reverse swathes of Prime Minister Liz Truss's economic growth plan which triggered a market rout. Yields on 20- and 30-year gilts slid by around 34 basis points in early trade, reversing most of their sharp rises seen on Friday when a statement by Truss failed to reassure investors about the government's fiscal plans. Gilt yields remain well above their levels seen before former finance minister Kwasi Kwarteng announced Truss's growth agenda on Sept. 23 - a measure of the deficit in investor confidence that Hunt must now address. "It would take an almighty fiscal tightening package to convince the market that a) the fiscal path is now sustainable and b) that Bank of England hiking risk is reduced," said Antoine Bouvet, rates strategist at ING. BoE Governor Andrew Bailey said on Saturday: "As things stand today, my best guess is that inflationary pressures will require a stronger response than we perhaps thought in August."

☆ British pound and gilts soar after Hunt rolls back tax cuts
▼ + stars: | 2022-10-17 | by ( ) www.reuters.com time to read: +9 min

Jeremy Hunt on Friday replaced Kwasi Kwarteng, who Prime Minister Liz Truss sacked following the so-called "mini-budget" on Sept. 23 that sent UK assets sliding. Hunt on Monday announced a series of tax changes that he said would raise 32 billion pounds ($36.19 billion) a year in extra revenues. STERLING: The pound rose against the dollar and the euro, gaining 1.1% and 0.7%, respectively , . So the UK is not the outlier when it comes to its monetary policy and its fiscal policy. STUART COLE, HEAD MACRO ECONOMIST, EQUITI CAPITAL, LONDON:"I think it would be a brave person to be buying sterling quite yet.

☆ UK CFOs say credit is expensive, hit by "mini-budget," Deloitte survey says
▼ + stars: | 2022-10-16 | by ( William Schomberg | ) www.reuters.com time to read: +2 min

The quarterly Deloitte UK CFO Survey found 56% of chief financial officers at top companies thought credit was costly, the most since 2010. "A 12-year period of easy credit conditions is drawing to an end," Ian Stewart, chief economist at Deloitte, said. Register now for FREE unlimited access to Reuters.com RegisterCFOs who responded after Sept. 23's mini-budget were more likely to report high credit costs than those who responded before, Deloitte said. The Deloitte survey found CFOs on average saw a 78% chance that Britain would fall into recession in the next 12 months, and had tilted towards defensive strategies which prioritised cost reduction and cash control. The survey of 87 CFOs, including 23 from FTSE 100 companies and 30 from FTSE 250 firms, took place between Sept. 20 and Oct. 3.

☆ New UK finance minister faces market verdict after gutting Truss's plans
▼ + stars: | 2022-10-16 | by ( William Schomberg | ) www.reuters.com time to read: +3 min

LONDON, Oct 17 (Reuters) - Britain's new finance minister Jeremy Hunt faces an early test of his attempt to stem the crisis of confidence in Prime Minister Liz Truss on Monday when the bond market delivers its verdict on his weekend overhaul of her economic programme. No chancellor should seek to do that," Hunt told BBC television in an interview broadcast on Sunday. The Sunday Times reported Hunt would delay by a year a cut to income tax for workers which Truss had promised for April. "MEETING OF MINDS"Any bond market respite is likely to prove fragile before Hunt announces a new budget plan on Oct. 31. The budget will aim to narrow a hole in public finances that the Sunday Times reported is as big as 72 billion pounds ($80.4 billion), including the 45 billion pounds of tax cuts originally planned by Truss, only about 20 billion pounds of which have so far been reversed.

☆ Goldman Sachs sees deeper UK recession after tax U-turn, Bloomberg reports
▼ + stars: | 2022-10-16 | by ( ) www.reuters.com time to read: +1 min

Oct 16 (Reuters) - Goldman Sachs analysts have downgraded Britain's economic outlook after Prime Minister Liz Truss removed Kwasi Kwarteng as chancellor and reversed a freeze in corporation tax, Bloomberg News reported on Sunday. "Folding in weaker growth momentum, significantly tighter financial conditions, and the higher corporation tax from next April, we downgrade our UK growth outlook further and now expect a more significant recession," Bloomberg cited the investment bank's report as saying. On Friday, Truss said Britain will go ahead with corporation tax rise to 25% next year, making an U-turn on a pledge to freeze it at 19%. Goldman Sachs did not immediately respond to a Reuters request for comment. Register now for FREE unlimited access to Reuters.com RegisterReporting by Jahnavi Nidumolu in Bengaluru Editing by Tomasz JanowskiOur Standards: The Thomson Reuters Trust Principles.

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