The chancellor announced sweeping moves aimed at reviving the economy in the much-anticipated “financial event” on Friday morning.
The government is calling it a “growth plan” at a time when the UK is facing a cost-of-living crisis, recession, soaring inflation and rising interest rates.
The chancellor told MPs that the planned increase in corporate tax would be scrapped as he announced that the maximum limit on bankers’ bonuses would be scrapped.
He also announced that the basic income tax rate would be lowered to 19 pence per pound from April 2023. He said the higher income tax rate of 45% would be “eliminated”.
Mr. Kwarteng said his economic vision would “turn the vicious cycle of recession into a virtuous cycle of growth”.
But shadow adviser Rachel Reeves said the strategy amounted to “accepting 12 years of economic failure” under successive Conservative governments.
The Labor MP described the Prime Minister and Mr Kwarteng as “desperate casino gamblers chasing a losing run”.
The chancellor says this is a good day for the UK
Kwasi Quarting said Friday was “a very good day for the UK”.
The chancellor told reporters in Kent: “I think it’s a very good day for the UK, because we have a plan for growth.
“We’re very optimistic about what we can do as a country. We’ve been having low growth and want a high growth economy and that’s what he was about this morning.”
Urging the fairness of tax cuts across the board, he said, “The prime minister campaigned for leadership on the basis that we would cut taxes and that’s exactly what we did.”
Market response to the budget is unprecedented, says ex-treasury chief
Lord Nick Macpherson, the former head of the Treasury, said he would not remember the financial intervention that triggered such a strong market response.
He said: “I have worked on about 60 financial events over the course of 31 years. I don’t remember any strong reaction from the market like today. £ is currently down over 3% v $, 1.8% v € and 2.5% v. The borrowing cost is up to 40 One basis point on the short end and 20 basis points on the long end.”
Nearly two-thirds think the Kwarteng tax cuts will benefit the rich more
Nearly two-thirds of people believe the Quasi Quarting tax cuts will benefit the rich more, according to a YouGov survey.
Of the nearly 9,400 adults surveyed, 63% said the changes would help the wealthy more, 3% said the poorer and 9% thought both groups would benefit equally.
More than half (52%) of respondents said that the Chancellor’s actions would not be effective or ineffective at all in developing the British economy, while only 19% answered that they were very effective or somewhat effective.
When asked about the impact on people’s lives, 28% said they would end up in a worse situation, 34% said the changes wouldn’t make a difference, and 19% said they would end up in a better situation.
Kwarteng refuses to suggest his economic plan is a ‘gamble’
Kwasi Quarting dismissed the suggestion that his economic announcement in Parliament on Friday was a “gamble”.
During a visit to the Berkeley modular housing factory in Ypsfleet, I was on Friday, he told reporters, “It’s not a gamble.
“What a gamble it is to think that you can continue to raise taxes and have prosperity, which is clearly not feasible.
“We can’t have a tax system where you get to the highest level in 70 years, so the last time we had tax rates at that level before my tax cuts was before Her late Majesty the Queen took the throne.
“It was completely unsustainable which is why I’m so glad I was able to cut taxes across the piste this morning.”
Watch: A Quick Glimpse of the Consultant’s Mini Budget
Ex-Conservative minister calls tax cuts wrong
Former Conservative government minister Julian Smith said the special chancellor’s decision to give “huge” tax cuts to the wealthy was a “mistake”.
“In a statement with many positive actions for enterprises, this massive tax cut for the wealthy at a time of national crisis and real fear and anxiety among low-income workers and citizens is wrong,” he wrote on Twitter.
Davey says the government is “absolutely out of touch with the public”
Liberal Democrat leader Sir Ed Davey said the chancellor’s speech on the budget showed the government was “absolutely out of touch” with the general public.
Speaking to College Green on Friday, Sir Ed said the fact that the pound fell to a 37-year low against the dollar during Kwasi Quarting’s speech to the House of Commons also indicates that global investors are “extremely concerned” about the government’s new economic strategy. .
He said: “This budget shows how far from the people the Conservatives are. Millions of families and retirees are struggling with rising energy, food and mortgage bills, and it seems that the Conservatives either don’t understand it or don’t care.
“We needed a plan to help people, and this is not a plan for our economy.”
He added: “It seems to me that investors around the world are very concerned about this economic package, whether it is the currency markets with the decline in the pound, whether it is the cost of government borrowing, which has risen against the background, they think that people are signaling a lack of confidence in the conservatives.
“So it’s not only members of the public who feel the government is out of touch, but also international investors.”
Beverage industry welcomes customs freeze
A planned increase in alcohol charges was among the measures put on hold by the chancellor in the House of Commons on Friday.
In a small budget that put tax cuts front and center, Kwasi Quarting announced that tariff increases on beer, cider, wine, and spirits would be eliminated.
Besides an 18-month transition measure for wine fees, he also said he would extend draft relief to smaller kegs to help support smaller breweries.
The Scotch Whiskey Association applauded the chancellor’s move, saying the government had “delivered”.
“The customs freeze will not only support our sector, but the hospitality industry and the economy in general,” she said.
IFS: Adviser ‘bet on the house’ on high-risk borrowing strategy
The Institute for Fiscal Studies (IFS) analyzed the advisor’s statement and said he was “betting on a risky strategy”.
Director Paul Johnson said: “Demand pumping into this hyperinflationary economy is letting the government go in the exact opposite direction of the Bank of England, which is likely to raise interest rates in response.
Early indications are that markets – which will have to lend money to plug the gap in the government’s fiscal plans – are unaffected. This is worrying.”
He said cabinet members could be forgiven for their flogging, such as the sudden change in the government’s change of economic policy.
“Mr Kwarteng is not just betting on a new strategy, he is betting on the house,” he said.
West End welcomes back VAT-free shopping for tourists
West End business leaders have hailed the return of VAT-free shopping to foreign visitors as a “great victory” for London.
Chancellor Kwasi Kwarting said it would reverse the abolition of the feature that made shopping in the capital 20 per cent cheaper for foreign tourists.
De Courcy, interim CEO of the New West End Company business group, said: “Today’s decision to reintroduce tax-free shopping to foreign visitors is a great victory for London’s international hubs.
“Now the West End can compete on an equal footing with Paris, Milan and Madrid as one of the best shopping and entertainment destinations in the world.”
“The return of VAT-free shopping for tourists increases London’s competitiveness when it comes to attracting the purchasing power of international visitors,” added Linda Elite, Head of Consumer Markets, Retail and Leisure at UK consultancy KPMG.