Only weeks into their new jobs, the Chancellor of the Exchequer and his boss, Prime Minister Liz Truss, presented their plan for tax changes that involved the biggest tax cuts for fifty years. Great news all round, you would think, but sadly the Mini Budget has not been as well received as the PM and the Chancellor hoped. Not by a long way.

The immediate outcome was a collapse of sterling and a fall in the value of leading shares. As the latter are the platform for the pensions of many of us, it was an unfortunate and ill-timed hit on many ordinary people’s finances.

It was quickly followed by a rise in interest rates as the Bank of England stepped in to help prop up the value of sterling. Rates were already on an upward curve as part of the battle against inflation; this latest intervention simply increased the pace and severity of the rate rises. There are more to come.

An inappropriate gesture

The Chancellor included in his mini-budget announcements the scrapping of the top rate of tax – the 45% you pay on any earnings over £150,000 each year. There are very few taxpayers in this bracket and, whilst they at least welcomed the news, the view of most people was that it was an inappropriate and unnecessary gesture, probably more politically motivated than economically sound.

This view of the PM and Chancellor’s motives was supported by the lack of any explanation as to how the tax cuts would be funded. A combination of more debt and maybe some public spending reductions are the obvious answers, but it would have been nice to have been told.

Businesses were happy with another of the Chancellor’s decisions, to reverse the plan of his predecessor to increase the rate of company tax from the current 19% by around one third to 25%. But again it failed the test of how it was to be funded and therefore the markets didn’t like it.

A week after the announcements, the Chancellor did a u-turn on the abolition of the 45%, much to almost everyone’s relief. A further week later he was called back from an official trip to the USA and fired on the spot by the PM, who immediately announced that the plan to increase the company tax rate was back on the table! And in a matter of days the new Chancellor had reversed all the remaining measures.

The whole fiasco has created a level of uncertainty that we didn’t need to see from those running the country in these already uncertain times.