wasi Kwarteng has unveiled a mini budget offering billions of pounds worth of tax cuts – including a surprise move to scrap the top 45% income tax rate paid by the UK’s wealthiest. The chancellor announced sweeping moves to revive the economy at the much-anticipated “fiscal event” on Friday morning. The government calls it a “growth plan” at a time when the UK is facing a cost of living crisis, recession, soaring inflation and rising interest rates. The chancellor told MPs the planned corporation tax rise would be scrapped as he announced the cap on bankers’ bonuses would be scrapped. He also announced that the basic rate of income tax would drop to 19p in the pound from April 2023. And he said the 45% top rate of income tax would be “abolished”.
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Mr Kwarteng said his economic vision would “turn the vicious cycle of stagnation into a virtuous cycle of growth”. But shadow chancellor Rachel Reeves said the strategy amounted to an “admission of 12 years of economic failure” under successive Conservative governments. The Labor MP described the Prime Minister and Mr Kwarteng as “two desperate gamblers in a casino chasing a losing streak”.
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Kwarteng rejects suggestion his financial plan is a ‘gamble’
Kwasi Kwarteng dismissed the suggestion his economic announcement in Parliament on Friday was “a gamble”. During a visit to the Berkeley Modular Housing Factory in Ebbsfleet, Kent on Friday, he told reporters: “It’s not a gamble. “What’s a gamble is thinking you can keep raising taxes and have prosperity, which obviously hasn’t worked. “We cannot have a tax system where you are at a 70-year high, so the last time we had tax rates at this level before my tax cuts was actually before her late majesty came to the throne. “That was completely unsustainable and that’s why I’m delighted to have been able to cut taxes across the track this morning.” 1663945845
See: The chancellor’s mini-budget at a glance
The Chancellor’s mini budget: At a glance 1663944822
Ex-Tory minister calls tax cuts ‘wrong’
Conservative former cabinet minister Julian Smith said the chancellor’s decision to impose a “huge” tax cut on the wealthy was “wrong”. “In a statement with many positive business measures, this huge tax cut for the very wealthy at a time of national crisis and real fear and anxiety among low-income workers and citizens is wrong,” he tweeted. 1663944001
The government is “completely out of touch with the public”, says Davey
Liberal Democrat leader Sir Ed Davey said the chancellor’s mini budget speech proved the government was “completely out of touch” with the general public. Speaking on College Green on Friday, Sir Ed said the fact that the pound had fallen to a 37-year low against the dollar during Kwasi Kwarteng’s speech in the House of Commons also showed global investors were “very concerned” about the government’s new economic strategy. . He said: “This budget shows how the Conservatives are out of touch with the people. Millions of families and pensioners are struggling with rising bills for energy, food, mortgages and it seems the Conservatives either don’t get it or don’t care. “We needed a plan to help people and this is not a plan for our economy.” He added: “It seems to me that investors around the world are very concerned about this economic package, whether it’s the currency markets with the pound falling, or the cost of government borrowing, which has gone up because of it. believe that people are signaling a lack of confidence in the Conservatives. “So it’s not just struggling members of the public who feel the government is out of touch, but also international investors.” 1663943013
The drinks industry welcomes the duty freeze
The planned increase in alcohol tax was among the measures put on hold by the Chancellor in the Commons on Friday. In a mini-budget that put tax cuts front and center, Kwasi Kwarteng announced that duty increases on beer, cider, wine and spirits would be scrapped. Alongside an 18-month transitional measure for wine tax, he also said he would extend relief to smaller casks to help support smaller breweries. The Scotch Whiskey Association praised the Chancellor’s move, saying the government had “delivered”. “The tariff freeze will not only support our industry, but the hospitality industry and the wider economy,” he said. 1663941825
IFS: Chancellor ‘bets the house’ on risky high borrowing strategy
The Institute of Fiscal Studies (IFS) think tank analyzed the Chancellor’s statement and said he was “betting the house” on a risky strategy. Director Paul Johnson said: “Bringing demand into this hyperinflationary economy leaves the government moving in exactly the opposite direction to the Bank of England, which is likely to raise interest rates in response. “Early signs are that the markets – which will have to lend the money needed to plug the gap in the government’s fiscal plans – are not impressed. This is worrying.” He said cabinet members could be forgiven for whipping out such is the sudden change of government economic policy. “Mr Kwarteng is not just betting on a new strategy, he is betting the house,” he said. 1663941257
The West End welcomes the return of VAT-free shopping for tourists
West End business leaders have hailed the return of VAT-free shopping for overseas visitors as “a big win” for London. Chancellor Kwasi Kwarteng said he would reverse the scrapping of benefits that made shopping in the capital 20% cheaper for foreign tourists. Dee Corsi, interim chief executive at business group New West End Company, said: “Today’s decision to bring back duty free shopping for overseas visitors is a big win for London International Centres. “Now the West End can compete on a level playing field with Paris, Milan and Madrid as one of the world’s leading shopping and leisure destinations.” Linda Ellett, head of UK consumer markets, retail and leisure at KPMG, added: “The return of VAT-free shopping for tourists increases London’s competitiveness in attracting the spending power of international visitors.” Read our full story here. 1663940253
Truss: Our vision defines how we will rebuild our economy
Liz Truss said the government’s economic vision would set out “how we rebuild our economy and deliver for the British people”. She tweeted: “Growth is key to delivering more jobs, higher pay and more money to fund public services such as schools and the NHS. “Our Growth Plan sets out how we will rebuild our economy and deliver for the British people.” 1663938590
Renewable energy industry cautiously welcomes plans to make it easier to build wind turbines
The renewable energy industry has provisionally welcomed the government’s plan to make it easier for developers to build wind turbines in England for the first time in seven years. The government said it would bring in rules for onshore wind farms in line with other developments. Rules that came into force in 2015 have effectively stopped the construction of any onshore wind farms in the UK since then. Jess Ralston, senior analyst at the Energy and Climate Information Unit, said: “Nearly eight in 10 people support onshore wind, so the ban was a major anomaly in British energy policy given that it is both cheap and popular with the public. “So a decision to lift the ban suggests the new government has listened to the experts and understands that building more British renewables reduces our reliance on expensive natural gas and so lowers bills.” But energy insiders also cautioned that more details will be needed and the rules will have to change before they know how significant the move will be. 1663937369
The conservative donor and businessman welcomes the tax cuts
Sir Rocco Forte, a Conservative donor and chairman of Rocco Forte Hotels, welcomed Chancellor Kwasi Kwarteng’s series of tax cuts. He told BBC Radio 4’s World At One programme: “I think it’s great. I have never seen a government hit the ground running as quickly as this one when it comes to power. “This is going to be a massive boost to the economy and it’s just the beginning I think of what the government plans to do. “I’m very, very encouraged by that. It’s a budget that will help businesses, allow individuals to reap the rewards of their efforts and hard work.”
