Sterling recovers all of last week’s losses
Financial Associated Press, October 4 (Editor Zhao Hao) On Monday (October 3) local time, British Chancellor of the Exchequer Quasi Kwarten said in a statement that he would abandon the previously proposed tax cut plan for income earners high
Previously, the British government announced a “small budget” containing a series of measures on September 23, with the intention of boosting the economy. One of the tax cuts – a plan to reduce the top 45% of income tax on people earning more than £150,000 a year (the richest 1%) to 40% has drawn widespread skepticism and criticism.
Earlier on Monday, Kwoten wrote on the social media platform that the package distracts from the government’s response to economic challenges, leading to the decision to abandon the plan to cut taxes for high earners.
Kwarten said, “We understand and listen to public opinion. Quitting allows us to focus on the most important parts of the budget.” British Prime Minister Truss has also retweeted Kwarten’s statement, emphasizing that “now the focus is building a high level. – growth economy.”
(Source: Truss Twitter) Controversy about a small budget continues
Media analysis noted that although the “small budget” offers a large-scale energy support scheme, it also includes canceling the company tax increase scheme, canceling banking bonuses, and reducing stamp duty on real estate purchases, with a total tax reduction of 45 billion pounds.
Although this tax cut scheme for high income earners only accounts for around £2 billion of tax cuts in the “mini budget”, it has suffered from rising household energy bills, high prices, and pension payments unclear in the UK. the highest.
According to calculations by the British agency, if it is implemented according to the unrevised “small budget”, a wealthy British family will receive around 4,700 pounds in subsidies next year, while an average family can receive less than half the subsidy .
Last week, the International Monetary Fund (IMF) publicly advised the UK government not to take the fiscal move because it “could increase inequality”.
In addition, the budget could leave the UK with high debt at a time when interest rates are rising, and Moody’s, one of the three biggest rating agencies in the world, wrote very directly that a huge, unfunded tax cut plan by the UK government endangering its credit. rating, threatening the country’s credibility with investors.
Turning the budget is still difficult to save Trus approval ratings
In the days after the announcement of the “small budget”, the British financial market experienced a tragic transaction, where the pound fell to its lowest level in almost 51 years at 1.0327, and the yield of the 10-year British government bond. also saw its biggest one-day increase in 40 years. This is the highest level since November 2008.
But after the British government announced today that it would abandon the tax cut plan for high income earners, the pound rose against the dollar, rising almost 1% on the day, and has recovered to the level before the scheme was published. In addition, the Bank of England reaffirmed that it will buy long-term British government bonds before October 14, and yields on 2-year, 10-year and 30-year British government bonds also recorded varying degrees of decline.
Speaking at the Conservative Party’s annual conference shortly before the announcement, Kwarten acknowledged “some volatility” with his economic plans. “It’s been difficult, but we need to focus on the job at hand, we need to move forward and not get distracted,” he said.
While the British financial markets have had a break, Kwarten and Truss could be under more pressure and their Conservative Party is at stake. More than half of the British public believe Truss should resign as prime minister, a poll showed on Friday, just 25 days after she officially took office earlier this month.
Separately, another poll at the end of September showed the opposition Labor Party leading the Conservatives by 33 percentage points, the highest record for Labor since 1998. “The damage from the controversial tax cuts has been done and now we we look incompetent,” said a Conservative MP.
