London announced on Monday that it would reverse the income tax cut for the wealthiest, unveiled ten days ago, which sent financial markets into turmoil.
Express coaster. The United Kingdom announced on Monday (October 3) to reconsider the income tax cut for the wealthiest, which was unveiled ten days ago and which threw financial markets into turmoil.
“It is clear that the removal of the 45% tax rate has overshadowed our mission to tackle the difficulties in our country. Therefore, I am announcing that we will not pursue it,” tweeted Finance Minister Kwasi Kwartengand adds: “We understand, we have listened”.
“This will allow us to focus on implementing the main elements of our growth plan. Firstly, the ceiling on energy prices”, elaborated the minister. This measure is valued at £60 billion in just six months, while it was meant to last for two years for households.
Liz Truss, who arrived in Downing Street in early September, and her Chancellor of the Exchequer, Kwasi Kwarteng, announced on 23 September a massive energy support plan for households, accompanied by huge tax cuts.
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The cut in income tax for the top bracket, which would have fallen from 45% to 40%, has been particularly controversial, accused of favoring the wealthiest amid the UK’s cost of living crisis.
Other tax cuts have also been announced, including the abolition of corporation tax increases or social contributions and the suspension of environmental taxes.
The plan as a whole, estimated at between £100bn and £200bn by economists but whose funding and economic impact have not been fully quantified, had caused confusion in financial markets.
The pound plummeted to a record low and UK government interest rates jumped to their highest since the 2009 crisis, threatening the country’s financial stability.
The Bank of England moved swiftly last week to stabilize interest rates, threatening to bankrupt pension funds.
Asked on the BBC about his possible resignation, the finance minister firmly rejected the possibility.