The British Minister of Economy, the conservative Kwasi Kwarteng, promised this Monday to continue with his controversial economic plan after having modified it due to the criticism received inside and outside his party.
Kwarteng acknowledged that it has been “a tough day”, in which he has canceled a key part of his fiscal strategy, but maintained that now he must focus “on the work” of promoting “growth” in the United Kingdom, which aspires to raise at 2.5%.
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The minister, who took office on September 6, defended his tax cut program especially for companies and high incomes in order to promote economic expansion, in his speech before the annual congress of the Conservative Party in the English city of Birmingham.
Before his speech, Kwarteng announced this morning that annulled the planned cut, from 45 to 40%, of the highest band of income tax, after the criticism received from deputies of his formation, who indicated that they would not vote in favor of the measure in Parliament.
a little turbulence
In his appearance before other members of the Government and the conservative base, the head of Economy argued that the commotion caused by his initiative to lower taxes on the wealthy has been “a distraction” and “a little turbulence”, which should not prevent forward the rest of the government strategy.
In the first row of the auditorium was, flanked by her ministers, the Conservative Prime Minister, Liz Truss, who at the opening of the congress on Sunday assured that the decision to eliminate the 45% band would not be reversed.
The barrage of reproaches received for promoting this controversial policy at a time of crisis due to the increase in the cost of living led, in a dramatic turn, to Kwarteng announcing on Monday that it was annulled.
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The minister, who confessed to being “totally pro-business”, insisted that he will go ahead with his intention to cancel the scheduled increase in corporate tax, from 19% to 25%, and announced that in the coming days he will detail measures to speed up the gross domestic product (GDP) growth, up to a target of 2.5%.
Among these elements to expand the economy and improve productivity will be liberalization of planning and construction regulations, agriculture, financial services, improvement of childcare provision and reform of social subsidies, he said.
He also promised to eliminate any remaining European legislation that “is preventing the country from advancing”, in one of the most applauded moments of the speech, which barely managed to harangue the bases.
Kwarteng promised to act with “fiscal responsibility”, after being censured for presenting on September 23 a “growth plan” with large tax cuts without accompanying GDP forecasts or a roadmap for net debt reduction.
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Bad electoral prospects
The negative reaction of the financial markets to this plan, which temporarily sank the pound and triggered interest on sovereign debt, has led many participants in this year’s annual congress to believe that their formation can no longer win the next elections, scheduled by 2024.
A survey released this Monday by Comres, conducted among 2,113 adults between September 30 and October 2, places Keir Starmer’s Labor at the top of the voting intention, with 50% support compared to 25% they receive the Tories.
The Labor Economy spokesperson, Rachel Reeves, has declared that, despite the last-minute capitulation, the damage caused by the Government’s economic policy “is already done”, since the debt risk premium has already risen, with a negative effect for public finances, and there is upward pressure on interest rates and mortgages.
Despite the last-minute capitulation, the damage caused by the government’s economic policy has already been done
Kwarteng, who has refused to resign due to his chaotic management during his first month in office, has promised to present a full economic plan, with forecasts from the Office of Budget Responsibility (OBR in English, public finance supervisor), in a parliamentary intervention on November 23.
However, his position as Chancellor of the Exchequer has been weakened, as has Truss’s, who on Wednesday will try to convince the Conservative base and the nation that he is the right person to lead the UK.
*With information from EFE
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