The tax cut plan continues
In particular, many MPs from the same Conservative ruling party had announced that they would vote against, risking a humiliating defeat for the Prime Minister in Parliament.
Liz Truss therefore chose this concession to save herself the rest of her tax maneuver, which includes lowering the base rate by one notch and not raising corporate taxes: tax breaks are indeed an ideological goal that cannot be renounced can the conservative prime minister and her chancellor, who see it as the only strategy for reviving growth in an economy on the brink of recession.
Dissatisfaction within the Conservative Party
The problem is that this massive tax cut would be funded by creating additional debt in a context of high inflation and rising interest rates: a decidedly unorthodox prescription that has raised concerns about the resilience of Britain’s public finances.
But while markets appeared to have calmed down in recent days, politics was churning in the waters: the Conservative Congress taking place in Birmingham these days saw the emergence of a dangerous internal wag against Liz Truss that risked being discouraged coming Months – if not weeks.
Opinion polls showed the unstoppable rise of the Labor Party, which could now present itself as the party of economic reliability. That is why the Prime Minister has chosen a partial retreat to catch her breath: and to try to convince her people and the country of the goodness of her long-term strategy.