British Financial Policy Uprising – DN.SE

Last Friday, Prime Minister Liz Truss’ representative, Kwasi Quarting, was fired.

Quarting’s “mini-budget” introduced three weeks earlier contained very large unfunded tax cuts. For most economists, the proposals were not based on reality.

Inflation is very high, the national debt is over 100 percent of GDP, and in this case, tax cuts of nearly SEK 600 billion are being implemented without funding the panicked players in the financial markets. They envisioned that the country would borrow for tax cuts, which would increase the national debt and give new fuel to inflation.

led to a financial crisis. The central bank, the Bank of England, has been forced to support purchases of government bonds, which have fallen in value, threatening the large pension funds in which they have invested.

The situation became unbearable for Quarting, who had to leave. In a televised address on Monday, Hunt announced that “nearly all tax proposals” should be removed from the mini-budget.

Corporate tax will be increased In April from 19 to 25 percent – Kwarteng wanted to maintain the minimum level. At both ends of the income tax scale, Hunt is canceling deductions. There will be no reduction in the basic income tax from 20 to 19 percent, but the higher level, which has benefited from the highest paid level in the country, will not be eliminated.

– It is not right to borrow to finance the tax cuts, Hunt said in his speech, and explained that the 20 percent level would be constant “for the foreseeable future”.

A series of other measures can be added to this, such as no freezing of alcohol tax or exemption from value-added tax for foreign tourists

Overall, Hunt’s proposal would boost the Treasury by £32 billion (about SEK 400 billion), compared to Kaewrteng’s mini budget.

But this is not enough. There will also be discounts. Each ministry was tasked with creating savings.

Unfortunately, there are more difficult decisions to come, Hunt said, but he promised that the government’s priority would be to protect the most vulnerable families.

That Hunt gave a televised address before explaining his proposals to Parliament is a departure from the norm in British politics. But he got the president’s permission to do so because he wants to calm the financial markets.

On Monday, it seemed to work. The pound strengthened against the US dollar and interest rates on government bonds fell.

For Prime Minister Liz Truss, changing economic policy is a humiliation. kicked Quarting But her mini-budget was just as big as hers and she advocated for it a week ago.

The gear position is very poor and some observers believe it has only days left forced away from his position.