U.K.’s New Finance Chief Warns Of ‘difficult Decisions Ahead’ Amid Political And Market Turmoil

U.K.'s New Finance Chief Warns Of 'difficult Decisions Ahead' Amid Political And Market Turmoil

LONDON (AP) – Britain's new Chancellor of the Exchequer warned of "difficult decisions" on Saturday after replacing her predecessor, who was in office for just 38 days.

Jeremy Hunt told several British journalists that the tax cut promised by Prime Minister Liz Truss will not be as big as people think and that government departments will have to cut their budgets.

"Not easy decisions," Hunt warned Britain's Sky News channel. "Some taxes won't go down as fast as people want, some taxes will go up." (Sky News is owned by NBC News parent company Comcast).

He added that "all departments will need to be more efficient than expected," referring to the return to austerity promoted by successive leaders of his Conservative Party after the 2008 financial crisis.

Image: Jeremy Hunt gives a TV interview after being appointed the new British chancellor (Chris J Ratcliffe/Getty Images) © NBC News Image Credits . Jeremy Hunt gives a TV interview after being appointed the new chancellor of Great Britain. (Chris J Ratcliffe/Getty Images)

Hunt also confirmed that the UK Treasury announced that it would present the government's medium-term financial plan on 31 October.

He sent a similar message to many other British broadcasters when he tried to distance himself from his predecessor, Kwasi Kwarteng, who was sacked on Friday after a market panic sparked by his business plan unveiled last month.

Kwarteng became the second lowest Chancellor of the Exchequer, as the British Chancellor of the Exchequer is known.

Fearing that he, too, could be ousted within weeks of taking office, Truss told a press conference on Friday that he changed course "to allow the market to weaken our financial discipline."

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He also sought to appease members of the Conservative Party, whose voter turnout had fallen in line with the value of the pound.

“The financial crisis that the UK is going through today was unfortunately avoidable,” George Deeb, director of the Center for Economic Justice at the Institute for Public Policy Research, a London-based think tank, told NBC News on Saturday.

Earlier this month, after repeatedly rejecting any proposals to change course, the Trust turned down a proposal to cut taxes for those earning more than £150,000 ($167,000) a year.

This didn't calm the markets or legislators.

British Prime Minister Liz Truss at a press conference at the Downing Street Conference Room (DANIEL LEAL via Daniel Leal/AFP Getty Images) © DANIEL LEAL Daniel Leal British Prime Minister Liz Truss at a press conference at the Downing Street Conference Hall. (DANIEL LEAL via Daniel Leal / AFP Getty Images)

The plan included a £45bn ($50.4bn) tax cut, more than the UK's annual defense budget, but did not specify how it would be funded or what services would be cut as a result.

This proposal caused interest rates and mortgage payments to skyrocket, the value of the pound to fall, and the cost of government borrowing to rise. More details about this will be revealed at the October 31 conference, but the political and economic damage has already been done.

The Bank of England had to step in and buy billions of pounds sterling, known as pigs, from the government to calm the market. Thus, the bank warned that this is a "material risk" for the entire financial system of the United Kingdom.

On Tuesday, the bank said it intervened to stop the "forced sale." Crucially, the bank's bond buying program was due to end on Friday, meaning the government had to reassure markets that its business plan was sound enough to avoid further chaos.

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The International Monetary Fund has sharply criticized the unjustified tax cuts, and economists and observers around the world doubt the wisdom of such a radical plan.

“While Kwarteng's expulsion and unwarranted tax cuts may provide some relief, it appears that they have already damaged not only the economy but also the credibility of this government,” Daibe said. he added.

While he agreed with Dib Hunt's assessment that tax increases were probably needed, he said that "after a decade of austerity, there were no further cuts in the public sector."

Rumors are already circulating that senior Conservative Party officials are plotting to overthrow the prime minister, and for Anand Menon, professor of European politics at King's College London, "the question is whether Liz Truss can survive next week."

The last two British prime ministers, Theresa May and Boris Johnson, have resigned after infighting within the Conservative Party rendered their positions untenable. Truss has been British Prime Minister for six years.

Menon added that the government's options are becoming increasingly limited, and the poor market reaction to Jeremy Hunt's media appearances leaves the British government no choice but to move on.

This article was originally published on NBCNews.com.

The pound fell after the UK government announced the biggest tax cut in 50 years.

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