No 10 orders to review mini-budget measures following market turmoil

Downing Street wavers on tax cut package Kwasi Kwarteng's mini-budget amid growing pressure from financial markets and public criticism from the International Monetary Fund (IMF).

A senior Number 10 official told The Independent that staff members had been tasked with a review of the measures unveiled in the Chancellor's poorly received statement to see if any changes or reversals might be needed.

The Treasury and the No. 10 insist last week's dramatic fall on Mr Kwarteng's planned abolition of the 45p income tax rate for high earners was decided conjoin ment by Chancellor and Prime Minister Liz Truss.

But a full-scale reassessment of such mini-budget plans would be taken as a sign of the Prime Minister's crumbling faith in his Chancellor.

The move comes after the Treasury received an initial assessment of Mr. Kwarteng's package from the Office of Budget Responsibility on Friday, which laid bare the extent of fiscal tightening that will be needed to restore the economy. UK's books balance.

And the Bank of England stepped in with emergency action for the second day in a row to avert a 'fire sale' of UK government bonds after market turmoil.

The IMF said the "disorderly" market activity was partly due to the chancellor's unfunded tax cuts.

The agency said predicts that economic growth will collapse from a forecast of 3.6% this year to 0.3% in 2023, while consumers react to rising inflation and interest rates.

Although the figures were calculated before the mini-budget, the IMF said it would only increase growth in the medium term "somewhat" in response to Mr. Kwarteng's plans, which would have the knock-on effect of "complicating the fight against inflation."

And in a clear sign that the IMF believes a reversal of the chancellor's changes could help curb the spiraling cost of borrowing, one official said: "A change in fiscal policy would change the path of interest rates going forward." p>

Speaking to The Independent on condition of anonymity, manager No 10 said staff "have been asked to review the measures and the OBR is working line by line".

They added: "The turmoil in the markets and the need for fiscal prudence are taken into account. Everything is reviewed again, including tax cuts.

"The situation will change a lot if energy measures are carefully means-tested next winter and if wholesale prices calm down a bit. But that alone is not enough to balance the books, as has been suggested, by reducing debt as a percentage of GDP."

Pressure from MPs to save reputation for fiscal prudence from the Conservative Party, and the severe market turmoil unleashed by the mini-budget has led to an overhaul of No 10, the official said.

Options reportedly being considered by No 10 include the possibility of a staggered rise in corporation tax, rather than staying at 19%.

Last month's mini-budget reversed the previous government's plans to increase the levy to 25% next year.

Plans being discussed would still keep it rs below 25%. percent until 2026, but could see it gradually increase to 22 over several years.

Another option considered to be under consideration is a one-year deferral of the 1p reduction from the basic income tax rate of 20p to 19p, which is currently due to come into effect in 2023.

However, this would only provide a one-off saving of £5bn and would have lit the impact on medium-term debt levels, as a reduction from 2024 had already been factored in by Mr Kwarteng's predecessor, Rishi Sunak.

Neither the No 10 nor the Treasury would confirm that the review exercise was underway.

A full timetable for the OBR to produce its final checks on Treasury calculations is expected shortly. The watchdog's judgment will be published alongside Mr. Kwarteng's full medium...