The economy has rallied following the ditching of the mini-budget, following polling which showed that over 80 per cent of mortgage holders feel they have to cut their spending.

Yesterday the FTSE 100, the pound and Government bonds all strengthened following the shock reversal of almost the entirety of Liz Truss’ fiscal strategy announced only weeks ago.

Kwasi Kwarteng’s mini-budget saw inflation reach new highs, with a severe effect on mortgages, with many providers upping their rates or withdrawing products altogether.

Exclusive polling from YouGov found that if mortgage payments increased in the next year, 45 per cent of people said that they would have to make “large cuts” to household spending.

A video grab from footage broadcast by the UK Parliament's Parliamentary Recording Unit (PRU) shows Britain's Chancellor of the Exchequer Jeremy Hunt announcing tax and spending measures, part of medium-term fiscal plan to MPs at the House of Commons, in London, on October 17, 2022. - The British government on October 17, 2022 axed almost all of its debt-fuelled tax cuts unveiled last month to avert fresh markets chaos, in a humiliating climbdown for embattled Prime Minister Liz Truss. The shock move by new finance chief Jeremy Hunt, parachuted into the job on Friday to replace sacked Kwasi Kwarteng, leaves Truss' position in a precarious state after a series of embarrassing U-turns. (Photo by PRU / AFP) / RESTRICTED TO EDITORIAL USE - MANDATORY CREDIT "AFP PHOTO / PRU " - NO MARKETING - NO ADVERTISING CAMPAIGNS - DISTRIBUTED AS A SERVICE TO CLIENTS (Photo by -/PRU/AFP via Getty Images)

This comes following news that the pressure on households could face further pressure after Jeremy Hunt cut short the Government’s energy support scheme by 18 months.

If interest rates are set to rise again in the next year, 16 per cent of people said they would consider selling their property.

Of those looking to switch their mortgage, half were looking to switch for five years or more, indicating many are looking for greater certainty from mortgage providers.

It is hoped that Jeremy Hunt’s financial plan will have a further calming effect on the economy in the run-up to his medium-term fiscal plan which will set out further measures and provide a forecast from the Office for Budget Responsibility.

In addition to ditching almost every tax-cut promised by Liz Truss and Kwasi Kwarteng, Mr Hunt also announced yesterday that he was establishing a new Economic Advisory Council, composed of “respected economists” and will be available for the Government to consult on its financial policies.

“I look forward to working with such an esteemed group of economic experts, whose advice will be invaluable,” said Mr Hunt.

“In a period of global economic challenge and volatility, exacerbated by Putin’s illegal invasion of Ukraine, prioritising UK economic stability is vital and will underpin long-term growth.”

One of the experts, Rupert Harrison, served as George Osborne’s chief of staff, doing little to alleviate fears that the UK will not be returning to the former-chancellor’s economic model of austerity as it did between 2010 and 2015.

Labour’s Angela Eagle said that the financial “black hole” in funding surely meant that the Government was now brining in “austerity 2.0”, but the suggestion was dismissed by the Chancellor during a heated debate in Parliament.

“I was a Cabinet minister in 2010 when we had very difficult decisions to take in the wake of the financial crisis and my department’s budget was cut by 24% and I don’t believe we are talking about anything of that scale,” Mr Hunt told MPs in the Commons.

“And I think it’s likely that cash spending will continue to go up but, that said, I want to be completely frank with people – we are going to have very difficult decisions both on tax and spending in the next couple of weeks.

“We will try and take those decisions as compassionately as possible, so it’s going to be tough going forward but I don’t expect it to be on a scale that she suggests.”

Mr Hunt defended lifting the cap on bankers’ bonuses, saying: “We will get more tax from rich bankers with the policy we now have.”

Economy rebounds as polling reveals 80 per cent of mortgage holders look to cut spending