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Britain’s new government on Friday unveiled a multi-billion-pound package to support households and businesses hit by the highest inflation in decades, cutting taxes as the nation heads for recession.
Finance minister Kwasi Kwarteng, fresh from being appointed by new Prime Minister Liz Truss, said caps on soaring energy bills would cost £60 billion ($68 billion) in the first six months.
The costly plan aims to boost economic growth — but sterling collapsed to its lowest level against the dollar since 1985 as traders fretted over its impact on public finances.
“The PM has acted with great speed to announce one of the most significant interventions the British state has ever made,” Kwarteng told parliament in a so-called mini budget.
“People need to know that help is coming.”
In a controversial move as millions of Britons face a cost-of-living crisis, Kwarteng axed an EU-inherited cap on bankers’ bonuses following Brexit to bolster the financial services sector.
He brought forward a plan to cut the lowest rate of income tax, and reduced the highest to 40 percent from 45.
The chancellor of the exchequer also reversed a planned increase in tax on company profits signed off by Truss’s predecessor Boris Johnson.
He had announced Thursday that he would scrap a tax on salaries, reversing a 1.25-percentage-point rise in National Insurance implemented by predecessor Rishi Sunak.
It comes as economists warned that Britain was likely already in recession, with rocketing fuel and food prices taking their toll.
Opposition politicians slammed the budget for rewarding the rich.
“The chancellor has made clear who his priorities are today — not a plan for growth, a plan to reward the already wealthy,” said Rachel Reeves, finance spokeswoman for the main opposition Labour party.
Pound collapse
In an ominous sign, the pound tanked to…
Source : france24
