It was the most controversial measure of the mini-budget presented by the government of Liz Truss, which sparked a wave of panic in the markets and the devaluation of the pound. Ten days after announcing he would end the 45% tax on income over £150,000 a year, and a day after promising he would “stay on track”, Britain’s Chancellor of the Exchequer arrived. , Kwasi Kwarteng, back on his plan. But the damage has already been done, with pundits saying he may need to compromise more, and conservatives (gathered at their annual conference) wondering how long Truss can stay at 10 Downing Street.
“We understand and listen,” Kwarteng wrote on Twitter. announcement of the retreat. The finance minister claimed that the decision to cut the tax “it has become a distraction from our primary mission to meet the challenges of our country”. And he defended that the focus should be on freezing energy prices, cutting taxes “to put more money in the pockets” of workers and investing in infrastructure, which are also part of the mini-budget.
Kwarteng also rejected the option to resign and spoke at the Conservatives conference in Birmingham in the afternoon, showing that he was eager to move forward. “What a day!”, he began by admitting that “it’s been difficult, but we need to focus on the work ahead. That’s what the public expects from the government.” And ironically, he believed that the mini-budget caused a “minor turmoil.”
Truss was elected leader of the Conservative Party in early September on a pledge to cut taxes – her opponent was former finance minister Rishi Sunak. But his proposal on the 23rd, which included a tax cut totaling £45bn and it was unclear how it would be financed, caused a crisis of confidence among investors. The result was a historic drop in the pound against the dollar and a rise in government debt, forcing the Bank of England to intervene.
The tax on income in excess of £150,000 a year was introduced in 2010 under Gordon Brown’s Labor government. At the time, that was 50%, with David Cameron reduced to 45% in 2013. Initially it affected about 200,000 taxpayers, but now it is more than 600,000 – the ceiling of €150,000 has never changed. The end of the tax would mean an average of £10,000 a year more for these taxpayers, who would be in the 40% tax bracket on income.
Despite the controversy, ending the 45% tax would only mean a loss of about £2 billion a year to the public treasury (a total of £45 billion in cuts). Therefore, this pullback may not be enough to restore market confidence. “Until we have a bigger turnaround and/or more clarity on the fiscal outlook, markets should “continue to be under pressure,” IG Index analyst Chris Beauchamp told AFP.
The PvdA believes that the government has destroyed its economic credibility and confidence in the economy. “They need to reverse the entire discredited economic policy,” Rachel Reeves, the party’s spokeswoman for finance, said of a “kamikaze” budget.
Liz Truss in trouble?
The Conservative Party conference, which runs until tomorrow in Birmingham, would be when the Tories showed their unity around the new prime minister – especially with Sunak and former prime minister Boris Johnson absent. But the scenario is anything but positive for Truss, who will speak tomorrow and admit to having trouble speaking in public.
Rumors are already circulating in the corridors of the conference that the prime minister, who has been in office for less than a month, may face a vote of censure by the party’s own deputies.. According to British media, the letters reach the 1922 Committee leader Graham Brady already — it takes 54 to provoke a vote of no confidence.
However, the polls show a bleak scenario for the Conservative Party. The Labor Party, led by Keir Starmer, appears in the latest YouGov poll (September 28 and 29) with 54% of the vote intentions, 33 percentage points more than the Conservative Party (21%). Another poll, by Opinium, conducted between September 28 and 30, put Labor at 46% (up seven percentage points in a month), while Conservatives do not rise above 27% (down seven points). A difference of 19 percentage points.
In the same survey, 55% of 2,000 respondents said they disapproved of Truss’ work, while only 18% approved. “Liz Truss has managed to get to the negative values Theresa May and Boris Johnson had at the end of their terms, weeks after they took office and days after their first major political action”pointed to the head of Opinium, James Crouch.
Source: DN
