Finance Minister Kwasi Kwarteng announced Monday morning in Birmingham that the maximum 45% tax rate for the richest would not be abolished after all. “We understand, we listen,” the conservative politician wrote in a statement posted on Twitter.
Earlier, prominent members of the Conservative Party such as former ministers Michael Gove and Grant Shapps had sharply criticized the tax breaks and the huge national debt and indicated that they intended to vote against them in parliament. The government feared a rebellion within its own party.
Pound ran to the basement after the announcement
Just over a week ago, Kwarteng announced tax cuts, which are primarily aimed at benefiting society’s wealthiest. Prime Minister Liz Truss’s new government wanted to boost economic growth. After the announcement of the debt-funded plans, the pound rate plummeted. The British central bank felt compelled to step in and buy government bonds with long maturities – no cap.
Kwarteng wants to stick to other equally controversial parts of the economic plan – including tax cuts for other income groups despite extremely high inflation.