London: Government of the British Prime Minister liz truss He was forced to take a humiliating U-turn on Monday, reversing plans to cut the highest rate of income tax, fueling a rebellion in his party and turmoil in financial markets.
Truss and his Finance Minister Kwasik Quartengannounced a new “growth plan” on September 23 that would cut taxes and regulation, funded by huge government borrowing, to lift the economy out of years of stagnant growth.
But the plan created a crisis of confidence in the government, affected the value of the pound and government bond prices, and shocked global markets to such an extent that bank of england A £65 billion ($73 billion) program had to be intervened to settle the gilt market.
“It is clear that eliminating the 45p tax rate has become a distraction from our core mission of tackling the challenges facing our country,” Quarteng said in a statement.
“As a result, I am declaring that we are not moving to eliminate the 45p tax rate. We get it, and we’ve heard.”
Less than four weeks after coming to power, the decision to reverse course is likely to put tremendous pressure on Truss and Quarteng. Britain has had four prime ministers in the last six politically turbulent years.
Truss, the 47-year-old former UK foreign minister who took office on 6 September after winning a leadership contest conservative Party Members, not the country, acknowledged on Sunday that they should have done more to “lay the groundwork” for the policy.
While the removal of the top tax rate was only expected to cost about 2 billion of the £45 billion tax-cutting plan, it was the most attractive element of the fiscal package to be funded by government borrowing. Quarteng did not say how it would be paid for in the long term.
The Truss also did not deny that it would need to cut spending for public services and on Sunday it refused to commit to raising welfare benefits in line with inflation – a toxic combination that has been seized upon by opposition parties. will be taken.
The pound has recovered all its losses against the US as the Quarteng gave a mini-budget and was up 0.8% that day at $1.125 at 0617 GMT.
Truss and his Finance Minister Kwasik Quartengannounced a new “growth plan” on September 23 that would cut taxes and regulation, funded by huge government borrowing, to lift the economy out of years of stagnant growth.
But the plan created a crisis of confidence in the government, affected the value of the pound and government bond prices, and shocked global markets to such an extent that bank of england A £65 billion ($73 billion) program had to be intervened to settle the gilt market.
“It is clear that eliminating the 45p tax rate has become a distraction from our core mission of tackling the challenges facing our country,” Quarteng said in a statement.
“As a result, I am declaring that we are not moving to eliminate the 45p tax rate. We get it, and we’ve heard.”
Less than four weeks after coming to power, the decision to reverse course is likely to put tremendous pressure on Truss and Quarteng. Britain has had four prime ministers in the last six politically turbulent years.
Truss, the 47-year-old former UK foreign minister who took office on 6 September after winning a leadership contest conservative Party Members, not the country, acknowledged on Sunday that they should have done more to “lay the groundwork” for the policy.
While the removal of the top tax rate was only expected to cost about 2 billion of the £45 billion tax-cutting plan, it was the most attractive element of the fiscal package to be funded by government borrowing. Quarteng did not say how it would be paid for in the long term.
The Truss also did not deny that it would need to cut spending for public services and on Sunday it refused to commit to raising welfare benefits in line with inflation – a toxic combination that has been seized upon by opposition parties. will be taken.
The pound has recovered all its losses against the US as the Quarteng gave a mini-budget and was up 0.8% that day at $1.125 at 0617 GMT.