42. Weekly Newsletter

Jeremy Hunt appointed Chancellor of the Exchequer

Last Friday (14th October), the Chancellor of the Exchequer was removed by PM Liz Truss after 38 days in the job following substantial turbulence in the financial markets following his mini-Budget. This marked the shortest serving chancellor since 1970. The newly appointed Chancellor is The Right Honourable Jeremy Hunt MP who has served in the Cabinet throughout his political career. After having graduated from Oxford University, studying Politics, Philosophy and Economics, he became a management consultant at OC&C Strategy Consultants and then served as an English teacher in Japan.

Hunt also founded, in 1991, a successful public relations agency which went on to sell for £30m. In 2005 he became an MP in Surrey and was appointed as Culture Secretary following the successful 2010 general election for the Conservatives. After this, Hunt become the longest serving Health Secretary in British political history (2012-2018) over the course of four different governments. However, the new Chancellor appears more reluctant about tax cuts after stating “some taxes will not be cut as quickly as people want” and “some taxes will go up”.

Newspapers & Politics

The UK’s front page news cycle over the last seven days have focused on the embattled PM who has sought to rebuild support following turbulent market conditions and the ongoing rising inflation levels. Over the weekend several Conservative-leaning newspapers have highlighted a ‘secret plot to oust [the] PM’ with suggestions of a new leader being installed. The Times believes that Rishi Sunak MP or penny Mordaunt MP could take the position following a collapse in support for the Conservatives in the polls. Some of the newspaper front pages over the last week were:

• The Times: Tories hold secret talks on crowning new leader
• The Guardian: Truss fights for survival as Tory rebel MPs warn that ‘game is up’
• Daily Mail: Plot To Topple Truss This Week
• The Sunday Times: Hunt takes full control as plotters circle wounded PM
• Financial Times Weekend: Truss sacks Kwarteng in bid to save premiership
• Metro: Blue Wall Falls (Conservative heartlands with low poll results)
• Daily Mail: Now Move Bank Holiday For The Coronation!
• The Guardian: Power giants to face windfall tax after all as Truss delivers U-turn

In a recent poll published by the Electoral Calculus the ruling Conservative Party face a nationwide collapse in support. The party polls with just 24.1% support (compared to 44.7% in 2019); whereas, the main opposition party (Labour) have surged with 50.6% support (compared to 33.0% in 2019). As such, Labour would win 507 seats (203 in 2019) versus the Conservative’s 48 seats (365 in 2019). In total there are 650 seats in the House of Commons which would leave space for a further 52 seats for the Scottish National Party alongside some of the smaller parties. A mapped version of the above data can be found here.

Interest Rate Hikes

The Bank of England (BoE) has warned of fresh interest rate hikes likely being implemented to a higher level than previously anticipated. The BoE governor, Bailey, described “inflationary pressures” as requiring a “strong response” which will be discussed at the next rate rise decision date (3rd November). However, Mr Bailey described his meeting with the new Chancellor (Hunt) as a “meeting of minds” which has been attributed to the reversal of tax cuts planned by the former Chancellor.

Prior to this announcement, markets had expected rates to rise by 0.75-1.00% in November’s BoE rates decision. This follows on from the 0.5% hike to 2.25% on 22nd September in a bid to return inflation rates back to the official target of 2% (8.6% in August). It is also expected that the Office for Budget Responsibility will review the new Budget after the previous Chancellor had blocked the review of the last statement.