Liz Truss plans emergency tax-cutting budget for next week

With the political landscape in the UK overshadowed by the death of Queen Elizabeth II, incoming Prime Minister Liz Truss plans to unveil an emergency budget next week. 

During the official 10-day period of mourning for the Queen, politics has remained largely on hold. 

But Truss and Chancellor Kwasi Kwarteng are expected to unveil a package including tax cuts in the days after the Queen’s state funeral on Monday September 19. 

The Prime Minister’s spokesman said, ‘We are still planning to deliver a fiscal event this month.’

Support package for businesses

Truss has already unveiled a £150 billion support package for households and businesses, with energy bills for households capped at £2,500 from October for two years.

Businesses have been offered a guarantee ‘equivalent’ to that offered to consumers, whose bills have been limited to a projected £2,500 per year.

Businesses have been offered protection for six months, with further details to be announced. 

Speaking in the House of Commons, Truss said,: “The business secretary will work with businesses to ensure those most in need will get support. His report will be collated in three months, giving business clarity.”

Bank holiday blues

Britain’s GDP grew by just 0.2% in July, according to figures from the Office for National Statistics (ONS), and grew annually by 2.3%. 

Craig Erlam, senior market analyst at OANDA, says, “The UK economy grew slightly less than expected in July, with growth supported by consumer-facing services on the back of the Women’s EUROs and the Commonwealth Games.

“With the additional bank holiday this month, the economy could be facing a small technical recession, albeit one that won’t be nearly as bad as was expected prior to the cap on energy bills. There’s a lot more data to come this week which should show consumer spending slipping as inflation remains above 10% and the labour market still strong.” 

The Bank of England’s Monetary Policy Committee was due to have its next interest rate meeting on September 15, but this has been pushed back by a week due to the death of Queen Elizabeth. 

The National Institute of Economic and Social Research warned last month that the Bank of England would need to raise interest rates to 3% to bring down inflation. 

Another 21 economists suggested that the bank would raise interest rates by 0.25% in September – after a 0.5% raise in August. 

British consumer price inflation rose to 10.1% in July, up from 9.4% in June, in the highest figure since February 1982, according to the Office of National Statistics.