UK: Truss Confirms New Tax U-Turn
During a news conference on Friday after the sacking of chancellor Kwasi Kwarteng, UK PM Liz Truss reversed plans to scrap a rise in corporation tax from 19% to 25% in a bid to "reassure the markets."
Facts
- During a news conference on Friday after the sacking of chancellor Kwasi Kwarteng, UK PM Liz Truss reversed plans to scrap a rise in corporation tax from 19% to 25% in a bid to "reassure the markets."
- In her speech, Truss stated that she would not resign, saying, "I am absolutely determined to see through what I have promised," and reaffirmed that a "low tax, high wage, high growth economy" was a goal that "remains."
- This marks the second reversal from the controversial "mini-budget" announced on Sept. 23. Despite the U-turn, the sterling fell approximately 1.1% against the dollar after Truss' speech.
- Truss conceded that parts of the mini-budget "went further and faster than markets were expecting" and claimed that the change would raise £18B ($21.12B) for the public purse following warnings by the Institute of Fiscal Studies that there was a £62B ($69.32B) hole in public finances.
- This comes as senior members of the 1922 Committee of Tory MPs are reportedly scheduled to meet later this weekend to consider "what needs to happen to assist her to get back to a sensible level of support."
Sources: BBC News, itv, CNBC, Newsbud, and telegraph.
Narratives
- Left narrative, as provided by The Guardian. Truss was never going to make a good PM, and it's now too late for her to be just an ordinarily bad one. Her lackluster speech saw her avoid responsibility and refuse to apologize, likely losing what little support she had left. It's clear that time's up for the self-serving Conservative party, which has demolished its credibility completely.
- Right narrative, as provided by Telegraph. The antigrowth coalition has wrongly, albeit successfully, pointed its finger at the government for the current — and worldwide — economic turmoil, and Truss has foolishly submitted to its pressure. Rather than sticking with the government's original agenda, the embattled PM has embarrassingly backpedaled — a futile and dangerous move that won't see a recovering economy. U-turns on tax cuts aren't the answer.
