The pound has crashed once more!Truss insists tax cuts are the right thing to do or spark fresh market turmoil
Financial Associated Press, October 5 (Editor Zhao Hao) On Wednesday (October 5) local time, British Prime Minister Truss delivered a speech at the Conservative Party Autumn Conference in Birmingham. Talking regarding scrapping the tax cuts for high earners, she insisted the cuts were “the moral and economic right thing to do”.
The British government announced on September 23 a “mini-budget” consisting of a series of measures, including a tax cut package – a plan to levy 45% of the annual income of more than 150,000 pounds (the richest 1% of the population) 45% The top income tax was cut to 40%, drawing widespread skepticism and criticism and causing market turmoil.
On Monday (October 3), Chancellor of the Exchequer Kwassi Kwarten announced that the government had abandoned the plan to cut taxes for high earners. “This package distracts the government from addressing the economic challenges, and dropping it allows us to focus on the most important parts of the budget,” Kwarten said at the time.
Truss confirmed that the “big shift” in policy was a joint decision with Kwarten. But she stressed that “supporting low taxes” is an issue that the Conservative Party has always supported. “The Conservative Party will always be the party that supports low taxes. We must be careful with taxpayers’ money.”
(Source: British Conservative Party social platform) Truss also added, “The tax cut will help the UK cope with the global economic crisis, and show the outside world that the UK is open to business, which will help improve the UK’s international competitiveness and attract more talents.”
Truss said the UK should seize the opportunity to leave the EU to gain greater autonomy. “By the end of the year, the red tape in the EU will be a thing of the past,” she said, adding that the Conservatives would ensure all rules were good for business and economic growth.
She continued, “For a long time, our economic growth has not been as strong as it should have been. Right now, I have three priorities for the economy: growth, growth and growth.”
She pointed out that the Conservative Party would “build a new era of Britain” and said she was ready to make “hard choices”. Truss also promised to develop more gas fields in the UK to provide people with better internet and cell phone signals.
During Trus’ speech, the pound fell more than 200 points once morest the dollar, and the lowest fell to 1.1239 at one point, a drop of more than 2% in the day. Although the British government has repeatedly explained that “tax cuts can stimulate and reform the supply side of the economy”, the market is obviously not convinced by this view.
It is worth mentioning that Truss’ predecessor, Boris Johnson, was also a supporter of tax cuts. However, Johnson eventually embarked on a policy path of “increasing taxes” and “expanding public spending” during his tenure.
Some agencies pointed out that the current idea of increasing the total government tax revenue through tax cuts in the UK is unrealistic, and will only increase social inequality and increase price pressure in the end. In addition, to finance the massive spending, the British government may need to borrow heavily, or reduce the country’s debt capacity in the long term.
