U.K. Chancellor Kwasi Kwarteng backtracks on 45 percent tax rate cut
In a major U-turn for the British government, Prime Minister Liz Truss said on Monday that the proposed scrapping of the 45 percent rate for those earning more than 150,000 pounds ($167,000) had become a “distraction.”
We get it and we have listened.
The abolition of the 45pc rate had become a distraction from our mission to get Britain moving.
Our focus now is on building a high growth economy that funds world-class public services, boosts wages, and creates opportunities across the country. https://t.co/ee4ZFc7Aes
— Liz Truss (@trussliz) October 3, 2022
Kwasi Kwarteng, the new chancellor, issued a similar statement, saying: “We get it, and we have listened.”
Truss’s government unveiled its hugely controversial economic plan in a “mini-budget” on Sept. 23 that would see the U.K. borrowing billions to pay for tax cuts and spending to insulate consumers from soaring energy bills.
The reaction to the plans was swift. Investors, fearing the moves would worsen inflation, dumped the pound and government bonds. In a highly unusual move, the Bank of England intervened last week to stop a financial market revolt.
The Conservative Party’s polls dropped, too. In one eye-watering poll by YouGov, the Conservatives were down 33 percentage points against the opposition Labour Party, a gap not seen since the 1990s.
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