Energy bill package will cost £60bn in first six months, Chancellor Kwasi Kwarteng says
The pound plunged to a 37-year low after the chancellor unveiled the biggest string of tax cuts in half a century in a mini-budget deemed unsustainable by tax experts.
In a scathing assessment, the Institute of Fiscal Studies said Kwasi Kwarteng was “putting the house on the line” by putting government debt on an “unsustainable upward path” and “without even the semblance of an attempt to adjust public finance figures.” make it knock”.
Critics believed that it would only benefit the rich and large corporations,
Mr Kwarteng’s plan, aimed at raising declining living standards by boosting growth, includes more than £70 billion in additional loans.
In a series of tax cuts costing up to £45bn a year, he scrapped the top tax rate for the highest earners, cut stamp duties and reduced the base income tax rate to 19p.
Mr. Kwarteng also confirmed that he will abolish the cap on bankers’ bonuses while adding restrictions to the social security system.
But the price of government bonds rose even higher amid fears that the package could collapse UK markets.
TUC leader Frances O’Grady said: “This budget is Robin Hood in reverse.”
Rachel Reeves, the shadow chancellor, said it was “a plan to reward the already rich”.
UK has ‘worst economic policy of major countries’, says ex-US Treasury secretary
Former US Treasury Secretary Larry Summers scathingly criticized the mini-budget, saying the UK was pursuing “the worst macroeconomic policy from a major country in a long time”.
“I’m sorry to say but I think the UK is behaving a bit like an emerging market turning itself into a sunken market,” he told Bloomberg, saying he wouldn’t be surprised if the pound would fall below a dollar.
“Between Brexit, how far the Bank of England fell behind and now this fiscal policy, I think Britain will be remembered for having the worst macroeconomic policy of any major country in a long time,” he said.
Jane DaltonSeptember 23, 2022 18:55
Mini budget: winners and losers
Experts from leading tax and consulting firm Blick Rothenberg have listed the big winners and losers of Chancellor Kwasi Kwarteng’s mini-Budget forTUSEN. Adam Forrest reports:
High earners – the rich benefit most from the premium discount and the abolition of the additional income tax rate. Someone who makes £1 million will save more than £50,000 a year. Someone making £20,000 saves just £218.
Business leaders – Changes in the national insurance rate from November can apply retroactively to drivers from April, so a “bumper” tax reduction.
New buyers – Changes to stamp duty that raise the threshold for payment to £425,000 will provide first-time buyers with some relief in the face of rising mortgage interest rates.
Small companies – companies will benefit from employer insurance cuts, as well as dividend rate cuts from April 2023, which would reduce the top tax rate on a dividend from 39.35 percent to just 32.5 percent.
Pubs and bars – The sector facing rising energy bills will get some relief from the scrapping of the planned alcohol tax increases.
Low-income individuals – people with an income below the personal allowance do not receive additional assistance.
Recent Home Buyers – people who have paid stamp duty in recent months during a period of higher tax rates.
future governments – Additional loans needed to finance the tax cuts could give future governments “significant headaches” when it comes to financing public services.
Jane DaltonSeptember 23, 2022 6:45 PM
Falling pound parity with dollar idea absurd, says minister
The Chief Secretary to the Treasury has dismissed warnings that the pound could fall to parity with the US dollar as “absurd”.
Chris Philp was asked whether the government should step down in this scenario, which economists have warned may be possible after the mini-budget tax cuts.
He told Radio 4’s P.M: “I’m not going to go into downright absurd hypothetical speculations.
“We only took office two and a half weeks ago.
“We have a job to do … We are going to make this country an economic success.”
Philp, who has been a minister for several years, was previously ridiculed after claiming Kwasi Kwarteng’s announcement had boosted the value of the pound just before it plunged to a 37-year low.
Jane DaltonSeptember 23, 2022 6:36 PM
Opinion: This is an almighty gamble
Business leaders fear the government will be forced into drastic corrective policy changes, while treasury experts believe the new tax cuts won’t pay for themselves. Analysis by Anna Isaac:
The government has made an almighty gamble
Spending watchdog sidelined has heightened market fears over UK finances
Jane DaltonSeptember 23, 2022 6:25 PM
How the basic income tax rate has fallen
The basic income tax rate has nearly halved in just under 50 years, analysis shows:
Jane DaltonSeptember 23, 2022 18:00
Tory MP proposes tax cut for the rich
Conservative former cabinet minister Julian Smith has condemned the chancellor’s decision to grant the wealthy a massive tax cut.
He responded to an analysis by the Institute for Fiscal Studies which found that workers who earn less than £155,000 will lose in the coming years, but those who earn more would gain due to the freeze on benefits and thresholds.
Jane DaltonSeptember 23, 2022 5:35 PM
Road and fossil fuel projects dominate the plan, environmentalists say
The mini-Budget’s plans to build roads and use fossil fuels undermine government climate goals and destroy environmental protection, Friends of the Earth said.
Mike Childs, head of science, policy and research, said: “Nearly two-thirds of the infrastructure priorities announced today as part of the Chancellor’s growth plan are road plans, along with five oil and gas projects in the North Sea.
Surely the government can no longer pretend its plans are in line with the UK’s legal obligation to reduce climate-changing carbon emissions? “It’s good that there are a few offshore wind projects in the mix – albeit a relatively small number – but beyond that there should have been a long list of onshore wind farms and solar farms because they are quick to build and an incredibly cheap source of energy.” Also missing from the growth plan is an assessment of the climate effects.
“Instead, it acts as a blueprint for tearing up key environmental safeguards and pursuing economic growth at any cost, which is the last thing we need in a climate and environmental crisis that is already destroying the planet.”
Jane DaltonSeptember 23, 2022 17:15
Ban on onshore wind farms abolished
Environmentalists and renewable industry leaders have tentatively welcomed the plan to end a de facto ban on onshore wind farms in England, which could theoretically lead to cheaper electricity generation. Adam Forrest reports:
Ban on onshore wind farms abolished in mini-Budget
Campaigners applaud move but condemn fossil fuel push and plan to weaken environmental protections
Jane DaltonSeptember 23, 2022 16:50
Dividend tax good for businesses, savers and retirees, says expert
A tax expert has described the mini-budget as “incredible, staggering and unbelievable”.
Nimesh Shah, chief executive at leading tax and consulting firm Blick Rothenberg, said it contained “tax-cutting measures not seen in a generation”.
“Kwarteng was bold in his claims that he wanted a simpler, more dynamic and fairer tax system, and you could say he backed that up with his box of tax-cutting tricks,” said Mr Shah.
In addition to the corporate tax cut, Mr Shah said the 6.85 percent cut to the highest dividend tax rate was good news for entrepreneurs and the self-employed who receive dividends, as well as savers and retirees with investment portfolios.
Jane DaltonSeptember 23, 2022 16:25
National insurance increases while corporate tax is lowered
National insurance policies have gradually increased over the past 40 years, figures show. The chancellor has canceled the latest planned increase due to funding social care.
Meanwhile, corporate taxes have been cut in the past 12 years since the Conservatives returned to power:
Jane DaltonSeptember 23, 2022 16:12