Kwasi Kwarteng will pledge to “turn the vicious cycle of stagnation into a virtuous cycle of growth” as he sets out the new Government’s approach to the UK economy.

The Chancellor will announce tens of billions of pounds both of increased spending and of tax cuts in his mini-budget, officially known as a “fiscal event”, at around 9.30am on Friday.

The statement is expected to include details of how the Government will fund the energy price cap for households and businesses, and put into practice many of Prime Minister Liz Truss’s tax-slashing promises.

The Government is dubbing it a “growth plan” of some 30 measures, which comes at a time when the UK faces a cost-of-living crisis, recession, soaring inflation and climbing interest rates.

What will Chancellor Kwasi Kwarteng announce today?

The Chancellor already confirmed ahead of his mini-budget that the national insurance hike introduced by Boris Johnson’s government to pay for social care and tackling the NHS backlog will be reversed.

He is also set to axe the planned increase in corporation tax from 19% to 25%, and scrap the cap on bankers’ bonuses as part of wider City deregulation.

It has also been reported that he will cut stamp duty in a further attempt to drive growth.

Isle of Wight County Press: PAPA (Image: PA)

Proposals to fast-track a scheduled 1p cut to income tax and to slash VAT from 20% to 15% across the board are reportedly also being considered.

The Government is in talks with local authorities in the West Midlands, Tees Valley, Somerset and other regions to establish new investment zones – areas with lower taxation and planning rules, the Chancellor is to announce.

“The time it takes to get consent for nationally significant projects is getting slower, not quicker, while our international competitors forge ahead. We have to end this,” Mr Kwarteng is expected to say.

He also wants new measures to speed up around 100 major infrastructure projects, including new roads, railways and energy projects, by watering down environmental assessments and other regulations.

In a shake-up of the welfare system, Mr Kwarteng could reportedly announce that 120,000 Universal Credit claimants will have to take active steps to find work or lose benefits.

A price cap for the next two years of £2,500 on the average household’s annual energy bill was announced by Ms Truss shortly after she took office, with a six-month freeze on bills for businesses and other non-domestic users unveiled this week.

Estimates of the cost of the energy package are as high as £150 billion.

 

Some economists have warned about the sharp rise in Government borrowing to fund the plans.

The Institute for Fiscal Studies said the strategy to drive growth was “a gamble at best” and that ministers risked putting the public finances on an “unsustainable path”.

What is a mini budget?

Unlike a full budget, which would typically be held in November, Mr Kwarteng will only put forward a handful of major legislative proposals.

He has come under fire for preventing the independent Office for Budget Responsibility (OBR) from making the economic forecasts usually published alongside a budget, sparking accusations that he is avoiding scrutiny.

The lack of OBR data means there will be no independent analysis of whether the announcements breach the Government’s existing budget rules or their impact on growth.

Earlier this week, Ms Truss said she is willing to be an unpopular Prime Minister to bring in measures she believes will grow the economy.

She admitted her tax cuts will disproportionately benefit the rich but rejected claims of unfairness as she bet on growth trickling down to the rest of society.