British Prime Minister Liz Truss admitted that the announcement of her fiscal plan to stimulate growth caused “changes” in the national economy, but insisted that she acted “decisively” to control the country’s finances.
In statements published by The Sun newspaper, quoted by EFE, the prime minister once again justified the controversial program with which she intends to boost economic growth in the United Kingdom, which has caused instability in the markets and plunged the pound sterling. “I will do things differently. This involves making difficult decisions and involves [causar] short-term changes,” Truss admitted to the newspaper.
The Conservative leader also reiterated her commitment to “grow the economy” with measures to stimulate growth in eight areas: business regulation, agriculture, housing and planning, immigration, mobile and broadband connections, financial services, childcare and energy. Truss also told the tabloid that she would keep “an iron fist on the national finances.”
When the British government revealed the details of the so-called “mini budget”, with massive tax cuts, it did not present, as is usual in this type of statement, the economic balances of the country’s economy, something that worried investors and forced the Bank of England to intervene, announcing an emergency purchase of sovereign bonds.
So far, the prime minister has rejected requests from various quarters to reverse the cuts, although this week she indicated she will release the outlook from the country’s oversight body, the Office of Budget Responsibility. [Office of Budget Responsibility, OBR]on November 23, the same day Finance Minister Kwasi Kwarteng is expected to release more plans for the economy.
Liz Truss’s plan provides for the reversal of the increase in Social Security contributions, in force since April, and the cancellation of the planned increase in corporate taxes. The plan also contemplates the extinction, in 2023, of the upper 45% of the tax on the income of individuals, the decrease from 20% to 19% in the lower bracket and an immediate bonus in the tax on the purchase of housing.
The cost of the biggest fiscal intervention in decades has been estimated at around £45bn (€51bn), to which is added £60bn (€68bn) from the energy support package in just the first six months, all backed by the state.
These measures were not accompanied by independent economic forecasts from the OBR or spending reduction plans, which raised doubts among economists and rating agencies about the sustainability of the public debt, currently at 96.6% of the Gross Domestic Product (GDP). .
Interest on British 10-year debt has already risen 325% this year, making it much more expensive for the government to sell bonds to finance policy. The Government’s strategy was also criticized by the International Monetary Fund (IMF), which warned of the risk of an acceleration in inflation, which fell to 9.9% in August, which could lead the Bank of England to rise from new reference interest rates, today at 2.25%
As a result, several banks have pulled hundreds of home loan products from the market in recent days as analysts and economists expect interest rates to rise as high as 6% next year.
Source: Observadora
