Britain's new finance minister Jeremy Hunt said on Saturday that some taxes would go up and government spending would rise by less than previously planned as he warned of difficult decisions ahead to restore Britain's economic policy credibility.
With financial markets in turmoil, Prime Minister Liz Truss fired Kwasi Kwarteng as finance minister and scrapped parts of their controversial economic package on Friday in a bid for political survival less than 40 days into her premiership.
Truss said that corporation tax would increase, abandoning her plan to keep it at current levels.
Although big, unfunded tax cuts were a central plank of Truss's original plans, Hunt said tax increases were on the cards.
"We will have some very difficult decisions ahead," he told Sky News.
"The thing that people want, the markets want, the country needs now, is stability," Hunt said. "No chancellor can control the markets. But what I can do is show that we can pay for our tax and spending plans and that is going to need some very difficult decisions on both spending and tax." He said spending would not rise by as much as people would like and all government departments were going to have to find more efficiencies than they were planning.
"Some taxes will not be cut as quickly as people want, and some taxes will go up. So it's going to be difficult," he said.
Kwarteng's September 23 fiscal statement prompted a backlash in financial markets that was so ferocious that the Bank of England had to intervene to prevent pension funds being caught up in the chaos as borrowing costs surged.
Hunt said he agreed with Truss's fundamental approach of seeking to spark economic growth but the way she and Kwarteng went about it had not worked.
"There were mistakes. It was a mistake when we're going to be asking for difficult decisions across the board on tax and spending to cut the rate of tax paid by the very wealthiest," he said.
"It was a mistake to fly blind and to do these forecasts without giving people the confidence of the Office of Budget Responsibility saying that the sums add up. The Prime Minister's recognised that, that's why I'm here."