Bowing to intense pressure from Conservative MPs and the market, Liz Truss agreed to rework the mini-budget, paving the way for a significant U-turn on the corporate tax cuts she signed.
In another serious blow to her authority as prime minister, government sources told The Guardian that a reduction in plans to abolish the corporate tax hike is currently “under consideration.”
rear Weeks defending the proposalDowning Street officials and ministers are trying to balance the books after announcing a huge package of underfunded tax cuts.
Kwasi Quarteng, who was in Washington for an International Monetary Fund meeting, was forced to deny his position as the prime minister was in danger, despite a growing Tory uprising. said he was “absolutely, 100 per cent” sure he would remain prime minister next month.
when asked daily telegraph Asked if people should expect a corporate tax U-turn, he replied: “Let’s see.”
Treasury sources downplayed the importance of the language. A Downing Street insider has suggested there is no “imminent” U-turn on key elements of the mini-budget. . Next Accounting Event on October 31st.
While it could calm the market, backing away from her plan to repeal the corporate tax hike would be “black wednesdayA proportion that could fatally undermine Truss’ premiership, as it was a central pledge of her leadership campaign.
Both British government bonds and the pound rallied strongly on Thursday. This was partly due to continued bond purchases by the Bank of England, but also in response to speculation about planned corporate and dividend tax cuts.
On another frenzied day in Westminster, government sources told The Guardian that the 10th official, not the Treasury counterpart, was reviewing the mini-budget in the prime minister’s effort to balance the books. rice field.
One of the No 10 insiders said bureaucrats, ministers and advisers had explained to the prime minister that the mini-budget needed to be rewritten, but the prime minister had not yet made up her mind.
Former Conservative Prime Minister George Osborne said: “Given the pain the financial turmoil has caused to the real economy, why waiting 18 more days for the inevitable U-turn of the mini-budget is in no one’s interest? Not clear,” he tweeted.
The Truss has repeatedly pledged to back out of former Prime Minister Rishi Snak’s plan to raise the corporate tax from 19% to 25%. Sources suggest that the potential uptick could include just a 1-2 percent rise, rather than the full 6 percent.
Amid growing speculation of a U-turn in Whitehall, Kwarteng said the mini-budget remains unchanged despite the discussion in issue #10. In an interview in Washington, where he visited his IMF for the first time as prime minister, he said. : “Our position remains unchanged…we will announce our medium-term financial plan on October 31. Details will be revealed at that time.”
The prime minister admitted there had been “some turmoil” in the market but avoided questions about a U-turn on the government’s plan to freeze the corporate tax. I speak to number 10. I always talk to the Prime Minister. We are fully focused on delivering on our growth plans. “
An official spokesperson for the prime minister said “the position has not changed” and early Thursday morning the No 10 ruled out further changes to the mini-budget despite pressure from Conservative MPs.
Some Tories have planned ways to remove the trusses, but Foreign Secretary James Cleverley said doing so would only make the situation worse. “I think changing leadership is a disastrously bad idea, not just politically, but economically,” he told the BBC.
Asked by the prime minister on Wednesday, Truss denied raising the corporate tax, telling lawmakers: “
The government has already broken promises to abolish the 45p top income tax rate, a major blow to the truss authority. This undermined her position as prime minister and her rebellious MPs warned her that she must either change course or be deposed.
Kwarteng’s mini-budget U-turn report was hailed by the IMF, which was publicly critical of the unfunded tax cuts announced last month.
IMF Managing Director Kristalina Georieva said: Now that we’ve discussed the importance of policy consistency and clear communication, there’s no reason to be more anxious during this uncertain time. “
With the impact of Kwarteng’s package still reverberating in global financial markets, Georgieva strongly supported the Bank of England’s action to halt the execution of pension funds, adding: Undermine monetary policy. That would make the task of monetary policy more difficult, leading to further increases in interest rates. So don’t let the pain linger. Make sure your policies are consistent. “
Kwarteng was publicly dressed down by US Treasury Secretary Janet Yellen at a meeting of G7 finance ministers and central bank governors, allowing her to savor international concerns at the event in the UK. Risks to financial stability.
Shadow Prime Minister Rachel Reeves said: Labor has repeatedly said it needs to overturn the kamikaze budget and restore confidence.
“Now that the Bank of England’s intervention in the market is over, this is a matter of urgency. [on Friday]The Tories cannot allow the turmoil caused by their small budget to continue any longer.”
https://www.theguardian.com/politics/2022/oct/13/liz-truss-may-raise-corporation-tax-in-further-budget-u-turn Liz Truss Bows to Pressure in Corporate Tax U-Turn ‘Considering’ | Liz Truss