The British pound has risen slightly against the US dollar in response to Liz Truss’s appointment of Jeremy Hunt as the UK’s new chancellor and the news that he plans to issue a new fiscal statement two weeks ahead of schedule.
The uptick means £1 sterling is now worth $1.13, a recovery after it crashed to a disastrous low in the wake of Mr Hunt’s predecessor, Kwasi Kwarteng, announcing his heavy-borrowing, tax-slashing “mini-Budget” to Parliament on 23 September.
The pound is meanwhile up 0.42 per cent against the euro (1.15), 0.41 per cent against the Japanese yen (167) but down 0.13 per cent against the Canadian dollar (1.55).
Mr Kwarteng’s statement last month, which was classed as a “fiscal event” to avoid its being costed by the Office for Budget Responsibility, was widely considered to be a reckless act of gambling with the public finances at a time of high inflation and inspired panic among the markets, forcing the Bank of England to step in to support ailing pension funds by buying up government bonds at a cost of £65bn.
Those events only served to undermine Ms Truss’s entire economic philosophy (perhaps fatally) and led to Mr Kwarteng’s humiliating recall from a meeting with the IMF in Washington, DC, on Friday 14 October in order to be sacked and save his boss’s premiership, despite her being at least equally culpable for the package he had unveiled.
Mr Hunt, an experienced former culture, health and foreign secretary, was immediately drafted in and spent the weekend attempting to soothe the situation in a series of media interviews and visiting Chequers, where he and Ms Truss staged crisis talks and planned further amendments to the government’s economic policy beyond the series of major U-turns on tax we have already seen in the turbulent weeks since the mini-Budget was unleashed.
The new chancellor is expected to ditch further measures announced by Mr Kwarteng on Monday in the interest of calming the markets, further weakening the already-minimal credibility of the unelected Ms Truss, who finds herself in the extraordinary position of being a lame duck prime minister just six weeks into her reign.
The Treasury said that Mr Hunt would make a public statement on Monday afternoon, followed by another to the House of Commons shortly after, announcing his plans to steady the ship.
All of which leaves Ms Truss, effectively, in office but not in power after rowing back on most of the promises she made to her party membership during this summer’s prolonged leadership contest, which saw her beat Rishi Sunak for the right to succeed Boris Johnson, despite all of his economic warnings about her “fairy tale” pledges being more than borne out by subsequent events.