British Prime Minister Liz Truss admitted she made communication errors when she announced huge tax cuts last week. In an interview with the BBC, she said she was still behind the plan.
Truss admitted she should have prepared the ad better. The budget brought turmoil to the financial markets. The value of the British pound fell and government bonds fell so much that the Bank of England had to intervene to prevent a crisis in pension funds.
The budget’s most controversial measure, scrapping the 45 percent tax ladder on profits over 150,000 pounds, was not discussed with its cabinet, Truss said, but Finance Minister Kwasi Kwarting’s decision. At the same time, her government is spending a lot on subsidies due to the energy crisis.
Truss said she understands that people are concerned about what happened. She is still behind the package of measures. But I accept that we should have prepared the case better. I have learned from him and will make sure to do even better in the future.” Earlier this week, the British Prime Minister denied that tax cuts only benefit the rich.
Investors and economists matter, because it is not yet known how the UK will pay for the scheme. The fear is that by borrowing large sums the government can raise inflation while the central bank wants to lower it. The International Monetary Fund has also warned that the plan could increase inequality.
The panic in the markets after the announcement of the so-called mini budget was also motivated by the lack of a separate account by the Office of Budget Responsibility (OBR). She insisted there was no more time for that. OBR said earlier that it could provide the prognosis.
Truss’s Conservative Party members have already hinted that they will vote against the budget plans. Conservative MP Michael Gove told the BBC she was “exposing the wrong values” by giving tax cuts to the richest Britons while many people were suffering from declining purchasing power.
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