Top Line

The UK government said on Monday it was abandoning controversial plans to eliminate the highest rate of income tax for high-income earners, a shameful U-turn for Prime Minister Liz Truss after the policy drew international condemnation , the markets stirred and pushed the pound to record lows.

Key Facts

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Truss’s government confirmed it was backing a plan to cut the top 45% rate of income tax—for those earning more than £150,000 ($168,000) per year—announced Just 10 days ago by Finance Minister Quasi Quarteng.

quarterly Told The proposal, one of several unpopular fiscal policies that sparked widespread public outcry and allegations of unfairness during a cost of living crisis, had become “a distraction” from the government’s mission to spur growth.

pound jump Against the dollar, following news of the government reversal, it briefly bounced back to $1.121 before hitting a one-week high of $1.128, briefly bouncing back from the announcement of Quarteng’s policies.

main background

The reversal marks a humiliating ascent for Truss's government after less than a month in power. The tax cut, which would have benefited the country's wealthiest 1%, was one of the fiscal policies announced by Quarteng in late September, along with other tax cuts, removal of caps on bankers' bonuses and plans to control rising energy costs. was involved. Which would have been financed by the increased borrowings of the government. The announcement came as a shock to many, including the members of the truss. cupboard, and no mention was made of it during Truss's lengthy campaign for party leadership or when she was elected to parliament in 2019 under Boris Johnson's efforts to increase public spending, end sweeping spending cuts and " promised to complete Brexit. The policies scared investors, pushing the pound to record lows against the dollar and causing turmoil in the markets. The Bank of England intervened on Wednesday to calm markets after the International Monetary Fund issued a rare criticism of the government's policy and urged it to reconsider.

tangent line

widespread negative reaction to government policies as well raging rebellion Among Conservative MPs, including senior members of previous governments who worked with the truss. despite working majority Out of 71, fears grew that the new government lose In a vote if the matter was placed before MPs in the House of Commons. The policy, along with the recent scandals of the previous government, has damaged the Conservative position among the masses and the elections have put up the opposition, Labour. narrow road For a landslide victory in the next general election.

important quotes

quarterly Told BBC He and the truss together decide to cut income tax - the opposite of truss' Statement On Sunday that the finance chief acted alone—and so decided to go back together. Quarteng admitted that he "take responsibility"For policy, Entry On Twitter that "We got it, and we listened."

what to see

truss is indicated On further cuts in public spending to help fund his government's fiscal policies, which the government insists will boost growth. Quarteng's mini budgetfinancial event" and came without Economic forecasts usually accompany the UK budget. Further policies could be announced at the Conservative Party convention this week.

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