December 1, 2022

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Liz Truss admits fault with controversial tax cut plan, but doubles down on it anyway

Liz Truss admits fault with controversial tax cut plan, but doubles down on it anyway


London
CNN

British Prime Minister Les Truss She acknowledged mistakes were made with her government’s controversial “mini-budget” announced last week – which pushed the pound to historic lows and created chaos in the market – but stuck to its policies.

Speaking to BBC correspondent Laura Koensberg on Sunday morning Gears He said, “I accept that we should have paved the floor better and I have learned from that, and I will make sure to do a better job laying the floor in the future.”

She said she wanted to “tell people that I understand their concerns about what happened this week and I stand by the package we announced and I stand by the fact that we announced it quickly.”

Last week, the Truss government announced it would cut taxes by 45 billion pounds ($48 billion) in a bid to get Britain’s economy moving again, with a package that includes scrapping the highest income tax rate for those on higher incomes from 45% to 40% and a significant increase in government borrowing. To cut energy prices for millions of families and businesses this winter.

many top economists He described the unconventional measures as a reckless gamble, noting that the measures came a day after the Bank of England warned that the country was already in a recession.

Truss said her government did not agree to the reforms, but it was a decision by Chancellor Kwasi Kwarting. “It’s a decision the chancellor has made,” she told the BBC.

But she doubled down on that decision, saying her government had made “the right decision to borrow more this winter to meet the extraordinary consequences we face,” referring to the energy crisis caused by the war in Ukraine. She claimed the alternative would be for people to pay up to £6,000 in energy bills, and inflation would be 5% higher.

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“We don’t live in a perfect world, we live in a very difficult world, with governments all over the world making tough decisions,” Truss said.

On the rising cost of living in the UK, and specifically rising mortgage rates, Truss said that was mostly driven by interest rates and was “a matter for the Independent Bank of England”.

The Bank of England said on Wednesday it would buy British government debt “in any size necessary” in an emergency intervention to stem a bond market crash that it warned could threaten financial stability.

Meanwhile, Credit Suisse said UK house prices could “easily” fall between 10% and 15% over the next 18 months if the Bank of England aggressively raises interest rates to keep inflation in check.

The fallout may make it difficult for people to get approved for mortgages, and encourage potential buyers to delay their purchases. Lower demand will lead to lower prices.

Truss defended her government’s policies to the BBC on behalf of Conservative Party annual conference kicks off in Birmingham.

The party is deeply divided, with its polls dropping even lower under the disgraced leadership of Boris Johnson.

On Sunday, that cold was evident, with Nadine Doris, the former culture minister who backed Truss to take over as prime minister, accusing Truss of throwing Chancellor Kwasi Kwarting “under a bus” in her BBC interview, when she said the tax cut decision had been made with him. Not the cabinet.

“One of BorisJohnson’s mistakes is that he can be too loyal at times and he’s got that. However, there is a balance and throwing your counselor under the bus on the first day of the conference, isn’t it really. [Hope] “Things are getting better and stabilizing from now on,” Doris said on Twitter.

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Conservative MPs fear that the combination of tax cuts along with massive public spending to help people deal with energy bills, rising inflation, rising interest rates and a falling pound will make winning the next general election impossible.