British Prime Minister Liz Truss's tax plans were almost all withdrawn a few weeks later. This was announced by new Finance Minister Jeremy Hunt on Monday. Tax plans drawn up by Kwasi Kwarteng, Truss and Hunt's predecessor, caused the value of the British pound to fall and bond yields to rise rapidly. Kwarteng was fired on Friday.
Truss and Kwarteng presented a temporary budget last month aimed at helping Britain's sluggish economy grow faster. For example, it was planned to reduce income tax, eliminate the tax fund for the wealthy and reduce corporate tax. The tax cuts were accompanied by a subsidy package to keep energy bills affordable, leaving a huge gap of tens of billions in the budget.
Financial markets were shocked by this gap, which caused the value of the British pound to fall rapidly and interest rates in bond markets to rise rapidly. As a result, many Britons saw a sudden increase in mortgage payments, and their pension funds ran into trouble.
Premier Truss initially stood her ground last week, but eventually decided to intervene. The planned corporate tax cut was cancelled, a tax fund remained for the very wealthy and his ally Kwarteng was expelled. He was succeeded by the experienced Hunt.
Hunt tried to calm those markets further on Monday by not cutting income taxes after all. A support package to keep energy bills affordable is also being examined. This reduces the budget gap.
Hunt's actions have eliminated almost all of Truss's tax plans. Monday's announcement is painful for the Prime Minister. The tax cuts were supposed to be the highlight of her premiership.
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