FazzNoth Posted September 23, 2022 Share Posted September 23, 2022 Package costing £161 billion is aimed at stimulating economy Economists say measures will add to inflation and debt Liz Truss’s new British government delivered the most sweeping tax cuts since 1972, slashing levies on rich households and companies in a bid to boost economic growth in a move that triggered a massive market selloff in UK assets. Chancellor of the Exchequer Kwasi Kwarteng announced a series of tax cuts and regulatory reforms that will cost £161 billion over the next five years. That fanned concerns about inflation, already near a 40-year high, and about a spiraling government debt burden. The pound crashed below $1.11 for the first time since 1985, sliding 2% in addition to declines earlier in the week. Borrowing costs on five-year government bonds jumped the most for a single day on record as traders dumped UK assets.“It is extremely unusual for a developed market currency to weaken at the same time as yields are rising sharply,” said George Saravelos, global head of foreign exchange research at Deutsche Bank AG. He warned the UK currency is “in danger” and suggested markets were treating it like a developing economy. The package was more ambitious than expected, with a big giveaway for the UK’s wealthiest households and plans to tear up planning rules and reform financial regulations. Kwarteng scrapped the 45% additional rate of income tax, paid by only the richest earners, leaving the top rate at 40%, and cut the basic rate from 20% to 19%. He paid only lip service to concerns about rising public debt, reiterating a pledge to “reduce debt as a percentage of GDP over the medium term.”The Conservative administration hopes its program of lower taxes and deregulation will turbo-charge the economy, staving off a recession that the Bank of England says has already begun and shaking the UK out of a decade of weak growth. Bloomberg: Business News Daily Before you change the world. Bloomberg. View Skip to content Bloomberg Subscribe Politics UK’s Biggest Tax Cuts Since 1972 Trigger Crash in Pound, Bonds Package costing £161 billion is aimed at stimulating economy Economists say measures will add to inflation and debt 0:13 UK Mini-Budget: Highlights of Kwarteng's Announcements Unmute WATCH: Highlights of UK Chancellor of the Exchequer Kwasi Kwarteng’s announcements.Source: Bloomberg ByPhilip Aldrick+Follow 23 septembre 2022 à 11:14 UTC+2 Updated on23 septembre 2022 à 14:23 UTC+2 Follow us at @BloombergUK and on Facebook, and wrap up your day with The Readout newsletter with Allegra Stratton. Liz Truss’s new British government delivered the most sweeping tax cuts since 1972, slashing levies on rich households and companies in a bid to boost economic growth in a move that triggered a massive market selloff in UK assets. Chancellor of the Exchequer Kwasi Kwarteng announced a series of tax cuts and regulatory reforms that will cost £161 billion over the next five years. That fanned concerns about inflation, already near a 40-year high, and about a spiraling government debt burden. Historic Giveaway Truss's tax cuts are the largest since Edward Heath was prime minister Source: Bloomberg analysis of OBR, Treasury data Note: Figures show the five largest tax giveaways and the five largest tax-raisers since 1970 The pound crashed below $1.11 for the first time since 1985, sliding 2% in addition to declines earlier in the week. Borrowing costs on five-year government bonds jumped the most for a single day on record as traders dumped UK assets. “It is extremely unusual for a developed market currency to weaken at the same time as yields are rising sharply,” said George Saravelos, global head of foreign exchange research at Deutsche Bank AG. He warned the UK currency is “in danger” and suggested markets were treating it like a developing economy. The package was more ambitious than expected, with a big giveaway for the UK’s wealthiest households and plans to tear up planning rules and reform financial regulations. Kwarteng scrapped the 45% additional rate of income tax, paid by only the richest earners, leaving the top rate at 40%, and cut the basic rate from 20% to 19%. He paid only lip service to concerns about rising public debt, reiterating a pledge to “reduce debt as a percentage of GDP over the medium term.” The Conservative administration hopes its program of lower taxes and deregulation will turbo-charge the economy, staving off a recession that the Bank of England says has already begun and shaking the UK out of a decade of weak growth. Slowing Down The loss of momentum since the financial crisis is forecast to worsen Source: Office for National Statistics, Office for Budget Responsibility Business groups embraced the decision, while economists said the measures may quickly become unaffordable. Unions and the Labour opposition said the measures will benefit the rich and do little to help those on moderate incomes with a tightening cost-of-living squeeze. The opposition Labour party branded it “casino economics” and others warned that the government’s fiscal credibility now depended on whether it can hit its growth target. Kwarteng rejected that criticism. “For too long in this country, we have indulged in a fight over redistribution,” the chancellor said. “We won’t apologize for managing the economy in a way that increases prosperity and living standards. Our entire focus is on making Britain more globally competitive.” More Info: https://www.bloomberg.com/news/articles/2022-09-23/uk-sets-out-biggest-tax-cuts-since-1988-to-boost-economic-growth?leadSource=uverify wall Link to comment Share on other sites More sharing options...
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