Kwasi Kwarteng sacked and corporate tax reversal: industry reaction

Following Kwasi Kwarteng’s dismissal as Chancellor, We Are Money founding adviser Jonathan Burridge said: “It’s been a complete mess.”

Earlier today the former Chancellor confirmed he had been sacked by Prime Minister Liz Truss. Speculation over Kwarteng’s future as chancellor began last night when he completed his trip to the United States a day early to return to the UK.

Truss replaced Kwarteng with former Health Secretary Jeremy Hunt.

Burridge comments, “It’s hard to imagine how the Truss administration can come back from such a rash and nationally damaging start.”

Meanwhile, Coreco chief executive Andrew Montlake said: “It’s officially now a government without a mandate, without a plan and without a clue.”

Montlake adds, “Conservatives know Truss can never turn people around after this and every time an election is called, they’ll be wiped out.”

“Their only chance is to install a Sunak and Mordaunt double act to restore a sense of calm maturity to the proceedings to see the country through tough times. That may not be enough, as the sense of outrage among Britons will linger for a long time.

Shaw Financial Services founder Lewis Shaw describes the Prime Minister as a “Thatcher bookstore with no mandate from the country”.

Shaw, who is calling for a general election, says: “We are scraping the barrel so hard we are at rock bottom. Just think of the poor carpenters whose job it is to remove the spur marks from the woodwork of Downing Street.

“The current administration has no ideas or leadership and has torpedoed our economy.”

Speaking at a press conference, following Kwarteng’s sacking, Truss said: “It’s clear that parts of our mini-budget have gone further and faster than the markets expected, so the how we carry out our mission right now has to change.”

“We must act now to reassure the markets of our budgetary discipline.”

“I have therefore decided to maintain the increase in corporation tax which was planned by the previous government.”

Truss also announced that corporation tax will rise to 25% as originally planned in April.

This is a notable reversal of the plan to freeze it at 19%, as detailed in last month’s mini-budget.

This is the second major reversal of an overall policy in said mini-budget, with the mini-budget the scheduled reduction in the additional tax rate was removed earlier this month.

Myron Jobson, Senior Personal Finance Analyst at Interactive Investor, comments: “Because the business models used by lenders to price mortgages are tied to gilt yields, mortgage holders and those seeking a Mortgage lenders are hoping for a return to competitive mortgage deals after mortgage rates soared between one and two percentage points in the fallout from the so-called “tax event”.

“However, the mortgage market remains precarious for buyers. Mortgage rates change daily, so it’s important for buyers and those looking to remortgage to keep calm and weigh their options.

Alvarez and Marsal chief executive, Kersten Muller, adds: “At the time of the now infamous ‘mini-budget’, it seemed likely that the reduction in the UK corporate tax rate would be reconsidered. A middle ground between the current rate and the proposed rate was expected.

“The increase from 19% to 25% seemed quite high, but the reality remains that the new rate will not be a hugely important deciding factor in determining whether businesses wish to establish and grow in the UK. So it’s no surprise that the rate cut has now been reversed.

“Corporate tax is one of the tax costs that businesses need to consider, but the rate does not take into account that some sectors could really benefit from targeted support while others are doing well, even in the current environment.

“More targeted measures like support for green initiatives and capital cost allowances would be more effective in stimulating investment and growing the economy.”

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