Tuesday, 29 November, 2022
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Britain's new PM delays crunch budget plan

Britain's new PM delays crunch budget plan

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British Prime Minister Rishi Sunak on Wednesday postponed an eagerly awaited budget plan due next week, as the youthful new leader got down to business after weeks of political turmoil.

Following a meeting of his new cabinet, Sunak engaged in his first parliamentary joust with opposition Labour leader Keir Starmer, who is demanding a snap general election.

Sunak, 42, ruled out an early election -- not due for at least two years -- as he vowed stability and fiscal rectitude following his appointment by King Charles III on Tuesday.

He succeeds Liz Truss, who served just 49 days in Downing Street.

"We will have to take difficult decisions to restore economic stability and confidence," Sunak told MPs at his first "Prime Minister's Questions".

He added that his Chancellor of the Exchequer Jeremy Hunt would set out a detailed plan "in just a few weeks".

"What I can say, as we did during Covid, we will always protect the most vulnerable, we will do this in a fair way," Sunak insisted.

Starmer repeated his demand for an election, accusing Sunak of lacking legitimacy after he was "trounced" by Truss in the summer's Conservative leadership run-off.

"So why doesn't he put it to the test, let working people have their say and call a general election?" Starmer asked, to cheers from the opposition benches.

- 'Test of time' -

Finance minister Hunt -- retained in Sunak's cabinet along with several other senior ministers -- said that Monday's planned "medium-term fiscal statement" was no longer so pressing.

Instead, there will be a full budget statement on November 17 to lay out the new government's tax and spending plans, Hunt told reporters.

"Now, we have a new prime minister and the prospect of much longer-term stability for the economy," he said, stressing the new plan would be accompanied by fresh economic forecasts from the Office for Budget Responsibility (OBR).

Hunt said he had discussed the delay with Bank of England governor Andrew Bailey. The central bank was forced to make several emergency interventions in recent weeks after Truss's now aborted tax-slashing plans financed by extra borrowing sent markets into a tailspin.

The delay would ensure the budget can "stand the test of time" to give British mortgage holders and businesses more assurance, Hunt said, after the Truss plan provoked a damaging spike in borrowing costs and torpedoed her premiership.

Markets were unperturbed by the postponement, suggesting Hunt and Sunak have successfully calmed investor nerves.

Truss left office as the UK's shortest-serving premier in history, replaced by its youngest since 1812 and first Hindu leader.

Sunak triumphed in a 96-hour Tory leadership contest after rival contender Penny Mordaunt failed to secure enough nominations from Tory lawmakers and Johnson dramatically aborted his own bid.

After appointing his top team Tuesday, Sunak spoke to the presidents of Ukraine and the United States to vow continuity on UK foreign policy, including ongoing support for Kyiv's resistance following Russia's invasion.

- 'Livid' -

Sunak has vowed to restore "trust" and "integrity" in government after months of tumult under scandal-tarred Johnson and then Truss.

But critics claimed the new leader had immediately undermined the pledge by re-appointing hardline right-winger Suella Braverman as interior minister, days after she was forced to resign for a security breach.

Braverman emailed classified government documents outside her department that reportedly included market-sensitive information from the OBR.

Sunak told parliament that she had "made an error of judgement" but had "accepted her mistake" and so he was "delighted to welcome her back".

Starmer raised allegations that he reappointed her after a secret deal securing her support against Johnson's audacious comeback bid.

"He's so weak he's done a grubby deal trading national security because he was scared to lose another leadership election," Starmer said.

"There's a new Tory at the top but as always with them, party first, country second," the opposition leader said.

Braverman's return raised eyebrows across the political spectrum, with Labour demanding answers on the implications for national security.

Cabinet secretary Simon Case, the UK's most senior civil servant, was "livid" over her swift return, a source told The Times.

As well as mending Britain's wounded finances, Sunak is also pledging to reunite the Conservatives after another bruising leadership contest, mere weeks after Johnson was forced out.

Finance minister under Johnson, he has kept Truss's defence, trade and culture ministers among others, as well as re-hiring some older faces from the Johnson cabinet.