In 2022, Jeremy Hunt confirmed that he wanted to scrap most of the tax measures in the disastrous fiscal statement of September 23 — apart from a £13bn cut to national insurance and £1.5bn in stamp duty changes. He said: “The most important objective for our country right now is stability. Governments cannot eliminate volatility in markets but they can play their part and we will do so”. “Corporation tax will rise from 19p to 25p and a cut to the lower rate of income tax of 1 percentage point April will be delayed. The government will reverse plans to cut dividend taxes, make payroll reform, a freeze in alcohol duty and introduce a VAT-free shopping scheme for overseas visitors”. Jeremy Hunt warned of financial problems of “eye-watering difficulty” ahead for the UK given inflationary pressures and rising interest rates.

1. Using examples  where appropriate, explain why the chancellor reversed the planned tax cut in the mini-budget.
2. Using examples where appropriate, discuss the role of fiscal policy, the mechanisms of how it works, and the problems of using discretionary fiscal policies to mitigate the impact of the crisis on national income.