As expected there has been another substantial U-turn by Prime Minister Liz Truss.
A few minutes after sacking her former Chancellor Kwasi Kwarteng, Truss announced that “parts of her mini-Budget” upset the markets.
So Corporation Tax will rise to 25 per cent from next year - not remain at 19 per cent as Truss and Kwarteng originally wanted.
Jeremy Hunt, a former Health Secretary under Theresa May, has ageeed to become Chancellor.
The latest U-turn came at a brief news conference in which she took just four questions from journalists, all asking about her own political future.
“This is very difficult” Truss admitted.
Kwarteng was sacked three weeks after unveiling £45 billion of unfunded tax cuts in the mini-Budget.
The plummeting pound and the decision of the Bank of England to intervene prompted the first Truss U-turn - reversing the scrapping of the 45p rate of income tax for higher earners.
Savills has responded to the news, issuing a statement saying: “Already we have seen long-term gilt yields fall on the back of rumours that the government will be backing down on some of Kwarteng’s unfunded tax cuts – and confirmation, as well as news of his dismissal as Chancellor, should help to push yields down further, allowing the Bank of England to slow its pace of monetary tightening and easing pressure on mortgage costs. And with more breathing room, lenders should feel the confidence to put more products back out to the market.
“As a result, we believe that some of the existing downward pressure on house prices and transactions will be tempered. That said, the market will still need to adjust to the current higher interest rate environment, though perhaps not at such an amplified level.”