Next Friday, the newly appointed Chancellor is expected to make a finance announcement to the House of Commons announcing the lifting of EU rules on bankers’ bonuses, which are currently capped at twice their salaries. Mr Kwarteng will also unveil other plans such as a £30bn tax cut to help with the cost of living crisis and support economic growth which the new government wants to increase by 2.5 per cent a year.
Mr. Kwarteng is expected to announce his plans to revise Solvency II, a European Union law that harmonises insurance regulation across all countries within the EU.
The replacement of Solvency II will require the support of the Bank of England regulator, which has concerns that policyholder protections would be reduced if the UK government scrapped Solvency II.
But insurers claim Solvency II has hampered their ability to pump an estimated £95bn into long-term infrastructure projects such as wind farms and social housing.
Earlier this year, the Financial Services and Markets Act under Boris Johnson’s government was put before Parliament to repeal all “EU-derived legislation”.
This could set in motion the mechanism for a replacement of Solvency II, but it may take years to get through Parliament.
The mini-budget announcement by the newly appointed Chancellor is also meant to show how Ms Truss’ government will deal with the current cost-of-living crisis.
Last week the pound hit a 37-year low against the dollar and the last time the pound fell that much was just after the Brexit vote in October 2016.
At a time when households and businesses are grappling with soaring prices and energy bills, concerns have been raised about how the new government will fund aid packages while cutting taxes.
The Bank of England forecasts that the UK could slip into recession by the end of 2022.
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The Government is also expected to explain how the Prime Minister’s plan to freeze household energy bills at £2,500 a year will work.
Economist Gerard Lyons said the current plans are “designed to avoid the deep recession that seemed inevitable a few months ago”.
Small businesses are also waiting to see how the new budget plan will affect them, and Control Energy Costs’ Liam Conway said his customers are “in limbo” while they await details.
This will come ahead of Mr Kwarteng’s mini-budget plan this Friday, and details of a full budget plan are expected sometime in the autumn when the Bureau of Budget Responsibility will release the cost of the Government’s plans.