The british government it is proposed to give reverse its controversial tax cutsas published by various English media such as ‘Sky News’.
Prime Minister Liz Truss is facing a open revolt within their own partyafter presenting a budget of tax cuts that are intended to be financed with more debt, and that has caused the decline in the British bond market and has put pension funds on the ropes.
According to information, the changes being discussed are the Corporation tax and the dividend tax. Government sources have also indicated that it is considering remove over £20bn of unfunded ‘mini-budget’ tax cuts. As well as talks are taking place about the implications of scrapping the planned £18bn corporate tax.
Following this news, the pound is up 2% and is trading at $1.1323. Likewise, long-term UK government bonds, known as gilts, rallied strongly, pushing yields down to just over 4.41%.
However, from Downing Street they insist that there will be no more changes of direction in the policies of the ‘mini-budget’, but it should be remembered that the finance minister, Kwasi Kwarteng, has already backed down on his intention to eliminate the tax rate of 45%.
Kwarteng will meet this Thursday with the leaders of the International Monetary Fund (IMF) in Washington DC, after the monetary institution pointed out that the tax cuts threaten to cause «trouble» to the UK economy.
Truss and Kwarteng have repeatedly stated that the cuts are necessary for the economy to grow, despite the fact that data published this Wednesday by the Office for National Statistics (ONS, for its acronym in English), have indicated that the country’s Gross Domestic Product (GDP) contracted by surprise in Augustfalling a 0.3% unexpectedly to its lowest level since December.
Kwarteng will set out his debt relief plan in more detail on Oct. 31, having bowed to pressure to move up the Nov. 23 date amid economic turmoil.
The ‘mini-budget’ of the Chancellor of the Economy, Kwasi Kwarteng, presented on September 23was the origin of a chaotic situation that the Bank of England (BoE) has been in charge of feeding due to its way of proceeding since it launched, last september 28an emergency intervention, with a £65bn bond purchase program to stop the collapse of the gilts.
To this must be added the statements of the governor of the body, Andrew Baileywhich on Tuesday issued a three-day ultimatum to pension fund managers to finish liquidating the positions that they could not maintain and noted that the central bank would stop market intervention as planned later this week.