Prime Minister Liz Truss is seeking to rally MPs around her to her tax cut policies following infighting and market turmoil.
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LONDON — British Prime Minister Liz Truss insisted on Wednesday that cutting taxes was “the morally and economically the right thing to do”, doubling down on a series of debt-funded economic reforms that have sparked fights within the party and turbulence in the markets.
Speaking at the Conservative Party Conference, Truss said she was determined to “level our country conservatively” in a bid to unite MPs around her tax cut plans and cement her authority in decline.
“Cutting taxes is the right thing to do morally and economically,” Truss said, adding that the Conservative Party “will always be the party of low taxes.”
‘The tax cut helps tackle the global economic crisis, showing that Britain is open for business,’ she said.
“For too long, our economy has not grown as strongly as it should have,” she continued. “We need to level our country conservatively.”
“We will keep an iron grip on the finances of the country,” she said, in an apparent nod to her political idol, Margaret Thatcher, otherwise known as the Iron Lady. “I have three priorities for our economy: growth, growth and growth.”
The four-day conference, held in Birmingham, England, was plagued by infighting and cabinet animosity as longtime Conservative lawmakers spoke out against the “growth-oriented” economic policies of Newly installed truss.
The latest rebellion has centered on Truss’s resistance to raising welfare benefits in line with inflation – currently around 9.9% in the UK – reneging on a promise made by his predecessor Boris Johnson.
In place, plans to increase support based on average income growthwhich, including premiums, was approximately 5.5%, according to the latest figures.
Truss said the proposals would save the government billions of pounds while “helping more people into work”. But other party members, including right-wing supporters, have warned the PM against cutting incomes for Britain’s poorest as the country faces its worst cost of living crisis since a generation.
House of Commons Leader Penny Mordaunt, who ran against Truss in this summer’s Tory leadership race, said on Tuesday she backs benefits “to keep pace with inflation”, joining a chorus of MPs who have warned the cuts could spur a party rebellion. .
Indeed, some Tories have warned that the Prime Minister – less than a month after taking office – is now fighting for his survival amid plummeting polls.
Grant Shapps, former transport secretary, said on Tuesday it was possible the Tories could change leaders again if Truss “hurts”.
Britain’s opposition Labor Party was seen to have a 33-point lead over the Conservative Party on Thursday, days before the Conservative Party Conference, according to a YouGov poll.
Still, Truss remained committed to her policy on Wednesday, saying, “Not everyone will be in favor of change, but everyone will benefit from the outcome.”
The Prime Minister’s speech was interrupted by shouts from environmental protesters, who were escorted out of the audience after Truss demanded: “Let’s have them removed.”
Backlash on tax cuts
This follows controversy over the announcement last month of a series of debt-funded tax cuts – estimated at £43billion ($49billion) – which critics say take advantage of disproportionately to the wealthy and corporations.
Truss argued that the cuts would spur growth at the top of the economy, with ripple effects across society.
Amid the backlash, the government was on Monday forced to abandon its plan to abolish the maximum rate of 45% of income taxin a bid to clamp down on financial markets after the proposals sparked chaos over UK assets.
British Prime Minister Liz Truss has admitted she should have prepared the ground better for the recent “growth-oriented” tax cuts that rocked financial markets.
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Announcement of decision in a tweetFinance Minister Kwasi Kwarteng said “we understand and we have listened”, adding that the plans had become a “distraction” following mounting backlash from both sides of the political aisle.
Tax reductions, among others supply-side reforms introduced in 23 September ‘mini budget’ – sparked turmoil in financial markets, causing the pound sterling to fall high of $1.0382 and UK 10-year government bond yields soar to 4.6%.
As a result, the Bank of England was forced to step in with a £65 billion bond purchase plan to support UK pension funds.