Chancellor's 2022 UK Budget Announcement: The Update

Introduction

The chancellor has just announced an update to his 2022 UK budget. Wait, what? The one that was released last week? Yes, in a dramatic U-turn that has thrown the Conservative party into turmoil, newly appointed chancellor Kwasi Kwarteng announced that he is reneging on part of the announced policy.

So what actually happened?

The most striking development was that the government has now abandoned the plans to abolish the 45% tax rate. This was the headline change, largely because it played into the "for the rich" budget narrative pushed by naysayers, although it actually wouldn't have added a great deal to the estimated tax base, and for considerable PR damage. This tradeoff is perhaps the main reason it was deemed unnecessary.

What else?

Well, the plan for a new fiscal statement has been brought forward a month, meaning we'll hear about the government's plans for spending and deregulation by the end of October. This is a decision designed to restore market stability at a time when it's desperately needed. This week's news will have exacerbated deep rooted problems in the Conservative party and stoked doubts over Prime Minister Liz Truss's future as party leader.