Just a few weeks ago, there we were adjusting to cooler, longer nights as the autumn mists returned. The key concern for many of us were rising energy costs and its inflationary impact for UK households. As expected the government under Prime Minister, Liz Truss chose to cap household energy costs rather than apply windfall taxes onto the big energy supply companies which was the alternative promoted by the Labour Party. This commitment by Governmen to support households is expected to cost taxpayers over £70bn.
Kwasi Kwarteng, our new Chancellor then announced some £45bn of tax cuts and reversals of previously announced rises in national insurance and corporation tax rates, whilst also adjusting the SDLT bands on property transactions.
These policy announcements have since resulted in financial market chaos and widespread withdrawals of mortgage products. The key criticism many have since aired, is that the government did not give any details as to how this huge extra borrowing will be funded. Given that the Bank of England (BOE) has just increased bank rate by 0.5% to suppress inflation, the announcements by Kwarteng on tax cuts and stimulus do appear contradictory, at least in the shorter term.
As we go to print today with this edition on 28th September, there is a huge amount of marketplace uncertainty given that we are being told that we will have to wait until later in November, when the government reveals the full details as to how these huge extra borrowings will be funded.