“It is clear that the removal of the 45p tax rate has distracted from our core mission to address the challenges facing our economy,” Finance Minister Kwasi Kwarteng said.
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LONDON – The UK government on Monday scrapped a planned scrapping of the top rate of income tax after a public backlash and major market jitters.
“It is clear that the removal of the 45p tax rate has distracted from our core mission to address the challenges facing our economy,” Finance Minister Kwasi Kwarteng said.
“As a result, I am announcing that they are not going ahead with the 45p rate cut. We understand that and we are listening.”
The cuts were poorly received by financial markets, and the scrapping of the 45% tax paid on income above £150,000 ($166,770) was seen as politically toxic as Britons grappled with a cost-of-living crisis.
Pound sterling in the days following their announcement fell to an all-time lowwere mortgage contracts withdrawn from the market and British government bonds began to sell off at a historic rate, led by the Bank of England start a temporary purchase program I am a quiet fickle.
The pound bounces briefly
British pound News that the UK government will announce a U-turn spiked on Monday morning. sterling was 0.8% higher dollars at one stage, but fell to $1.1212 at 7:30 a.m. London time after the official announcement. Returns it to the previous level Kwarteng announced a number of tax cuts on September 23.
With the ruling Conservative Party diving There was also a so-called “mini budget” in opinion polls evaluated In a rare move by the International Monetary Fund, several politicians opposed the proposals.
A big U-turn
In an interview with the BBC on Monday morning, former transport secretary Grant Shapps said scrapping the top-rate tax cut was a “sensitive response” because “the tax cut for the people who need it least … has made people uncomfortable … it’s it was unsustainable.”
It represents a major and humiliating U-turn for new Prime Minister Liz Truss, who as of Sunday insisted she was “absolutely committed” to the cuts.
He also revealed that the decision was taken by Kwarteng and not announced to his entire cabinet. The plan would have given the country’s 660,000 highest earners an average annual benefit of £10,000, the Treasury said.
Truss said in a tweet on Monday: “Abolishing the 45 per cent rate has distracted us from our mission to get Britain moving.”
“Our focus now is to build a high-growth economy that funds world-class public services, raises wages and creates opportunities across the country.”
