Forget U-turn, the Prime Minister’s actions amount to a full 360.
We are almost back to square one with the decision to reinstate the increase in corporation tax from 19% to 25%, drawn up by the previous administration, and to bin the plan to axe the 45% additional rate income tax band.
We are now set for another fiscal event on Halloween headed by the new Chancellor, Jeremy Hunt.
Far from spooking the markets, the Government will hope that unpicking some of the mini-Budget headline and market quaking announcements will stave off a nightmare before Christmas for the UK economy.
The UK markets have so far reacted positively to the news. Both the FTSE 100 and FTSE 250 are up.
The elephant in the room following the mini-Budget was how would the tax cutting measures be funded after the colossal spend on Covid and cost-of-living support measures.
The costings were conspicuously missing from the announcements, and it became clear that significant government borrowing would be required – fuelling concern over the swelling public debt as the cost of borrowing grows.
The Government will hope that reinstating the increase in corporation tax will show the markets that it is serious about balancing the books.
The whole saga shows that even long-standing western democracies are not immune to seismic political and economic shifts.
Myron Jobson is senior personal finance analyst at interactive investor
