Kwasi Kwarteng last night dismissed claims that he is playing the UK economy down with big tax cuts and reforms, as the “minimum budget” has been hit by a backlash from markets and the economy.
The pound fell to $1.09, its lowest level in decades, after Kwarteng announced tax cuts that would cost up to £45 billion a year at a time of double-digit inflation.
Conservative MPs have warned that their party is at risk of financial and political disaster if it fails to boost growth. Interest rates are now expected to hit 5.5 percent next year, markets say, driving up the cost of housing and other types of debt, which could wipe out the benefits of tax cuts for many homeowners.
But Mr Kwarteng told the BBC: “I don’t think it’s gambling at all. What was a gamble, in my view, is to stick to the course we are on. We had taxes at their highest level in 70 years, the highest since the late 1940s, and that was unsustainable.”
Without increasing the average growth of 2.5 percent, he insisted, it is very difficult to provide public services and generate tax revenue to provide the services that we all want to see.”
His tax reform included a surprise cut in the income tax rate and the removal of the 45 pence surcharge that now applies to anyone earning £150,000 or more.
Independent economists have suggested that only high-income earners will be the net beneficiaries of this year’s changes to the tax system, with a freeze on what people pay at the basic and higher income levels. which eliminates the impact of reducing the income tax and the State. Insurance.
Almost two-thirds of people said in a snap poll that the package would help the rich more, and just one-fifth said they would be better off despite lower tax rates.
According to YouGov, 63 percent of voters believe that the tax plans “will primarily benefit the rich over the poor.” Only 19 percent think the package will make things better for people like them, and 28 percent predict it will make things worse.
But despite the setback, the government plans to push ahead with a series of “supply-side reforms” to regulate planning, immigration, childcare, digital infrastructure and agriculture to boost the economy. After the Tory conference in early October, ministers will announce new policy elsewhere every week. i understand
In his writing, Mr. Kwarteng confirmed the Prime Minister’s earlier announced plans to reverse the increase in national insurance. He said the energy bill support package unveiled earlier this month would cost around £60bn a year for six months, and he promised tax cuts of £45bn in 2026-27, all funded by massive public debt.
The Prime Minister has confirmed speculation that he is cutting stamp duty and scrapping the bankers’ bonus. It also introduced a cut in the basic rate of income tax from 20 pence to 19 pence, which will now take effect in April 2023 instead of 2024, and scrapped the additional rate so that no one now pays the lower rate. of more than 40 pence.
Many business leaders welcomed the measures, but Labor leader Rachel Reeves described the speech as “an admission of 12 years of economic failure”, while Liberal Democrat leader Sir Ed Davey said it was “budgetary millions of dollars.”
Source : zonadeprensard.com