Britain | Liz Truss is not backing down from a tax cut favoring the rich, but admits the presentation went wrong

Britain’s prime minister Liz Truss admitted on Sunday that his government’s tax cut plan should have been better reasoned, but insisted on implementing it.

The Treasury minister Kwasi Kwartengin the mini-budget promised debt-financed tax cuts of 45 billion pounds. The plan sent the pound plummeting against the dollar, sending market interest rates soaring and spooking investors.

The International Monetary Fund (IMF) issued a rare strongly-worded statement urging the government to reconsider its actions because debt-financed tax cuts are fueling already high inflation and worsening income inequality.

The central bank, the Bank of England, came to the rescue and bought loan papers in a grab-and-go trade so that the pension companies that had invested in government bonds would not go bankrupt. Government bonds have been a credit investment for pension companies because they have been considered stable and low-risk.

Truss was not startled by the swing but promised that the tax sale will boost economic growth and increase Britain’s attractiveness for investments.

“We have a clear plan to move forward in solving the energy crisis and respond to inflation,” Truss assured.

Truss will be on the defensive in the coming days as the Conservatives gather for their annual party conference in Birmingham.

Former minister Michael Gove said he doesn’t think Truss’s economic policy is wise.

“There was no discussion of tax cuts for the wealthiest during the Conservative election,” Gove said. BBCaccording to

Fresh ones opinion polls show that the conservatives’ support has eroded since Truss came to power. A Yougov poll reported that 51 percent wanted Truss to resign and 54 percent wanted Kwarteng out as well. In a recent survey, the Labor Party has a lead of no less than 33 percentage points over the conservatives.

Britain won’t have a general election until January 2025 at the earliest, but many conservatives are already worried that the party’s long reign is coming to an end.

Market nervousness doesn’t seem to be letting up. The central bank’s message that it may raise its interest rates even more raises concerns in the housing market. The Bank of England recently raised its key interest rate to 2.25%.

Housing financiers have withdrawn from the market 40 percent of the loan products they offer, i.e. loans with fixed interest for 2–10 years. When loans start being offered again, interest rates are guaranteed to be at a higher level than at present.

Many households are facing difficult times when the monthly loan costs can increase by hundreds of pounds.