Chancellor of the Exchequer Kwasi Kwarteng, our Business Secretary’s UK correspondent, has announced that the UK government will no longer scrap the top tax rate on incomes over £150,000 (around €160,000). The measure was part of the major tax cut plan announced on Friday 23 September which sparked a severe UK financial crisis, with the pound falling to an all-time low and government bond yields to their highest levels.
We understand and we have listened. pic.twitter.com/lOfwHTUo76
– Kwasi Kwarteng (@KwasiKwarteng) October 3, 2022
The news comes after days in which both Chancellor and Prime Minister Liz Truss had publicly defended the plan, even in the face of explicit and unusual criticism from the International Monetary Fund and even after the Bank of England had to exceptionally intervene in markets to protect financial stability .
In fact, the government was forced to abandon the tax cut after Truss realized over the weekend that the measure would never win parliamentary approval. Indeed, many Conservative Party members had expressed concern at the unpopularity of a large tax cut among the wealthy at a time when UK households face dramatic bill hikes and the highest inflation in 40 years.
Today, largely because of Truss’s disastrous plan, the Labor Party opposition has reached its maximum lead over the Conservatives in decades, beating them by 20 to 30 percentage points in the polls.