Latest 2022 mini-budget: Kwarteng tax cuts send the pound plummeting

Latest 2022 mini-budget: Kwarteng tax cuts send the pound plummeting

Energy bill package will cost £60bn in first six months, says Chancellor Kwasi Kwarteng

The pound plunged to a 37-year low after the chancellor unveiled the biggest series of tax cuts in half a century in a mini-budget deemed unsustainable by tax experts.

In a scathing assessment, the Institute for Fiscal Studies said Kwasi Kwarteng was “betting the house” by putting government debt on an “unsustainable increase path” and “without even the semblance of an effort to make the public finance numbers add up.” ”.

Critics attacked it as benefiting only the rich and big business,

Kwarteng’s plan, which aims to raise falling living standards by boosting growth, involves more than £70bn in extra borrowing.

In a series of tax cuts costing up to £45bn a year, he has eliminated the top rate for the richest, slashed stamp duty and anticipated a cut in the base income tax rate to 19p.

Kwarteng also confirmed that he will cut the cap on bankers’ bonuses and add restrictions to the welfare system.

But the price of government borrowing rose even higher amid fears that the package had sent UK markets crashing.

TUC leader Frances O’Grady said: “This budget is Robin Hood in reverse.”

Rachel Reeves, the shadow chancellor, said it was “a plan to reward the already rich”.


Welcome to The Independents UK Policy Blog for Friday 23 September 2022 where we will provide you with the latest updates from Westminster on Chancellor Kwasi Kwarteng’s mini-budget.


Kwarteng announces tax cut worth thousands for the rich and nothing for the poorest

The 1.25 percentage point increase in National Insurance introduced by Rishi Sunak will be reversed from 6 November, Chancellor Kwasi Kwarteng announced.

The health and social assistance fee was intended to alleviate the financial crisis that had paralyzed the assistance system.

Treasury figures show that the new measure will benefit far more earners than the poorest:


Kwarteng seeks end of ‘cycle of stagnation’

Chancellor Kwasi Kwarteng will detail around £200 billion in tax cuts, energy subsidies and planning reforms as part of Prime Minister Liz Truss’s bid to end “treasury orthodoxy”.

Financial markets will also receive an initial price for the proposals as the UK Debt Management Office will publish new borrowing plans after Kwarteng finishes his speech.

The market scenario could hardly be more hostile for the new finance minister. The pound sterling tumbled to its lowest against the dollar since 1985 yesterday, while British government bonds recorded their biggest one-day drop since the start of the pandemic.

Chancellor Kwasi Kwarteng arrives in Downing Street for the first cabinet meeting after Liz Truss took over as new prime minister on 7 September 2022 in London, England

(Getty Images)

Much of the decline reflects the US Federal Reserve’s rapid interest rate hikes to tame inflation – which have sent markets into a tailspin – but some investors are also wary of the prime minister’s willingness to borrow heavily to finance the growth.

A Reuters poll this week showed that 55 percent of international banks and economic advisers surveyed judged British assets to be at high risk of a sharp loss of confidence.

On Thursday, the Bank of England said Truss’ energy price cap would limit inflation in the short term, but that government stimulus was likely to further increase inflationary pressures at a time when it is struggling with inflation. close to a 40-year high.


Calls on Liz Truss to honor pledge to put £13bn into welfare

The councils are urging the prime minister to honor her pledge to put billions into social assistance, as the government’s plans to eliminate the newly introduced National Insurance levy were confirmed.

Ahead of his mini-budget on Friday, Chancellor Kwasi Kwarteng said the tax increase – introduced to pay social assistance and tackle the NHS backlog – will be rolled back from 6 November.

Earlier this week, Liz Truss said her “first priority” in social care is to fund it properly during the winter because there are “too many” people admitted to the hospital due to a lack of vacancies.

In the campaign, she pledged to invest £13bn in welfare.

Read the details in this report:


Truss announces stamp duty cut

The government is set to cut stamp duty in today’s mini-budget, according to reports.

Authorities have been working for more than a month on plans to spur further growth in the housing market and help more young people buy their first home, he says.

But critics say the move will worsen the housing crisis, writes Tom Batchelor:


Consumer confidence drops to fourth record in five months

Consumer confidence has dropped to another new low amid deep personal finance worries next year, the figures show.

The GfK Consumer Confidence Index dropped five points in September to minus 49, the worst score since records began in 1974.

The latest record low is the fourth in the past five months, with confidence in personal finance next year dropping nine points to minus 40 and confidence in the economy for the next 12 months falling eight points to minus 68.

The main purchasing index, an indicator of confidence in purchasing large items, was unchanged at minus 38 but is down 32 points from the same period last year.


Cancel MPs’ recess after Budget, say Lib Dems

Liberal Democrats are demanding that the government cancel the upcoming parliamentary recess to allow proper scrutiny of the chancellor’s mini-budget.

Lawmakers were supposed to take a break for conference season yesterday, but are now sitting an extra day to allow time for Kwasi Kwarteng’s tax return today, which is expected to put many of the tax-cut promises made by Liz Truss during the Tory. leadership campaign.

The House of Commons is expected to return from recess early, on 11 October. The break was cut short to continue business after a suspension of politics following the Queen’s death.

But the Lib Dems said the recess was unnecessary and accused the government of using it to avoid scrutiny.

The party presented a motion to end the recess.

Lib Dem Treasury spokeswoman Sarah Olney said: “The Conservative Party spent weeks over the summer talking to each other while the country was in crisis. Now they are proposing another unnecessary pause instead of allowing Parliament to properly scrutinize their budget plans which risk burdening the country with unsustainable debt.”


Kwarteng ‘run to growth’ on mini-budget raises fears for environment and economy

Chancellor Kwasi Kwarteng has unveiled plans to end environmental protections across large swaths of the UK as part of Liz Truss’ “run for growth” strategy.

The budget will include a “growth plan” including measures to combat high energy prices and inflation and accelerate major infrastructure projects, along with a network of investment zones where planning rules will be hacked to encourage development.

The plans – which will be a central part of Kwarteng’s emergency budget today – have sparked horror among green groups, who have warned they would put the country’s natural beauty at risk by a wave of shoddy developments, reports our political editor. Andrew Woodcock.


John Swinney: UK government policies create more poverty

Scotland’s Deputy Prime Minister said the UK government’s policies had created more poverty after a report suggested the number of children living in poverty in Scotland had increased since 2017.

Speaking to BBC Scotland on Thursday night, John Swinney said the Scottish government was acting against a “tide” of various changes by the UK government that “create more poverty”.

A white paper published by Audit Scotland on Thursday showed that around a quarter of children in Scotland were living in poverty between 2017-20, an increase of 3% from figures collected between 2011 and 2014.

“Child poverty is lower in Scotland than in other parts of the UK and this is a consequence of the measures we have taken in relation to measures such as the Scottish Child Payment,” Swinney said.


Wrong to reveal big tax cuts without OBR forecast, think tank says

The government should not announce major tax cuts without an independent economic forecast from the Office for Budget Responsibility, warned the head of an economic think tank.

The government is not allowing the OBR to make the forecasts it usually publishes along with a budget.

But Torsten Bell, the chief executive of the Resolution Foundation, said it was “almost inconceivable that any reasonable OBR forecast would not show the increase in debt over the forecast period.”

Speaking to members of the Treasury Select Committee, he also criticized the government’s decision to tie the OBR’s hands.

“It’s not a good idea to announce big, permanent tax cuts without an underlying economic forecast,” he said.

He also said that Jacob Rees-Mogg was wrong to say that the OBR “has always been wrong.”

“The country is making better economic policy decisions because (the OBR) exists,” Bell told lawmakers.

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