Next Budget set for spring, Chancellor confirms after drama in money markets

The Chancellor will deliver a Budget next spring, the Treasury confirmed on Monday, as part of a move to settle the markets as the pound slumped to historic lows following Friday’s mini-budget.

Downing Street had earlier signalled plans to push ahead with its massive package of tax cuts, despite speculation that the Bank of England could make an emergency intervention as the pound plunged to an all-time low against the US dollar.

Pressure had been mounting on Kwasi Kwarteng, the architect of the Friday’s fiscal event alongside Liz Truss, to respond to the precipitous drop in the pound as markets reacted badly to the Government’s new economic plans.

While no firm date has been set, the Treasury said on Monday that it will take place in the spring, alongside a forecast from the Office of Budget Responsibility.

There had been speculation in recent days about when a full Budget might be held, after a mini-budget ushered in a package of tax cuts on a scale unmatched by any budget since 1972 – a move labelled a “gamble” by many commentators.

Friday’s mini-budget had been hailed as “new era” for the UK by the chancellor, as the Government signalled the start of a new-look economic policy designed to attract investment and reverse a decade of sluggish economic growth.

But concerns about the cost of living and inflation are likely to still dominate next spring, with economists warning that the current crisis is unlikely to have abated by the middle of next year and it is likely that the Government will face a number of crunch decisions in the next Budget.

In particular, the Government plan to slash the cost of wholesale gas and electricity for businesses and non-domestic customers is scheduled to last for six months from October, while cost of the energy price guarantee scheme to reduce the unit cost of electricity and gas for households should also be clearer by next year.

On Friday, Mr Kwarteng said that the the total bill for the Government’s energy package would amount to £60 billion for the six months from October.

The spring Budget will follow in the wake of a medium-term fiscal plan on November 23, also announced on Monday by Mr Kwarteng.

It came as the Bank of England warned it will change interest rates by “as much as needed” to get inflation back under control from current runaway levels.

Governor Andrew Bailey said that the Monetary Policy Committee (MPC) would discuss the impact of the Chancellor’s new mini-budget when it meets again in early November – quashing speculation that the Bank might announce emergency measures this week.