Truss Weighs Fresh U-Turn To Stave Off Market Panic

Climbdown on corporation tax expected this weekend

- Anna Isaac Andrew Woodcock Adam Forrest

Liz Truss is poised to tear up further elements of Kwasi Kwarteng’s disastrous miniBudget, with a U-turn on corporation tax expected as early as this weekend.

Discussions were understood to be taking place in 10 Downing Street on a means to avoid fresh market panic after the Bank of England withdraws its emergency bond-purchasing scheme at the end of trading today. The decision to U-turn came after The Independent revealed on Tuesday that officials had been asked to go through the tax giveaway Budget line by line to see where there was scope for change.

The Independent understands that an announcement is planned ahead of Monday’s reopening of markets to restore partially or in full the corporation tax hike to 25p scheduled for 2023 by Rishi Sunak but cancelled by Mr Kwarteng last month. No final decision will be made until the chancellor returns late on Friday from a trip to New York where he was rebuked by IMF president Kristalina Georgieva for pursuing an expansive tax-and-spend policy at odds with the Bank’s efforts to rein in inflation.

In a scarcely veiled call for London to be ready to embrace Uturns, Ms Georgieva said her message to national leaders was: Don’t prolong the pain... It is correct to be led by evidence. If the evidence is that it has to be a recalibration, it is right for governments to do so.” Government bonds and the pound rallied on speculation that a climbdown on corporation tax was in the offing, as well as an uptick in the Bank’s bond-buying activity ahead of today’s deadline.