Thursday, June 1, 2023
HomeEconomyBritain's Truss breaks silence on market slump, defends her tax cuts

Britain's Truss breaks silence on market slump, defends her tax cuts

Muvija M and Kate Holton

LONDON (Reuters) – British Prime Minister Liz Truss broke her silence on Thursday after her tax cut plan sparked nearly a week of chaos in financial markets , said she was willing to take a “controversial” decision to rekindle growth.

A day after the Bank of England took emergency measures to revive its bond-buying program to protect pension funds from a potential partial collapse, Truss blamed the unrest on inflation caused by Russia’s invasion of Ukraine

“We have to take urgent action to get our economy growing, to get the UK moving, and to deal with inflation, which of course means making controversial and difficult decisions,” she said in a local interview. said in a series of interviews on BBC Radio.

“But I’m ready to do it as Prime Minister because what’s important to me is to get our economy working.”

Truss became President in September Prime Minister No. 6 after winning the leadership of the ruling Conservative Party and promising tax cuts.

UK government bond yields soared in early trade on Thursday after her finance minister, Quasi Kwaten, laid out a fiscal plan on Friday, reversing some of the plunge on Wednesday when the Bank of England declared emergency action . [GB/]

Sterling is down around 1% against the dollar after falling more than 7% in September, almost double the euro’s decline against the dollar.

“This is the right plan for us,” Truss said, adding that it would put the UK economy on a better track in the long term.

Asked in an interview whether the small budget should be reversed, Truss said: “No, it’s not because of the size of the package we announced Friday. Partly in support of energy issues about individuals and businesses, which I think is absolutely the right thing to do.”

Dramatic move

Investors, businesses and consumers now More details are awaiting the government’s announcement of how it plans to speed up economic growth, which will be key to tackling Britain’s increasingly stretched public finances.

“Government is now being criticized daily, weekly, and monthly by markets and businesses for the emphasis it places on growth and its fiscal responsibility to pay down debt,” Tony Danker ), the director-general of the Confederation of British Industry said late on Wednesday.

Former Bank of England Governor Mark Carney criticized the tax cut plan, saying it undermined the Bank of England’s efforts to curb inflation and sowed chaos in financial markets.

“Unfortunately, in this situation – a difficult global economy, a difficult position in financial markets, and a different purpose than banks – led to quite dramatic movements in financial markets, as we have seen ,” Carney told the BBC.

Kwarteng’s deputy, Chris Philp, said the government would stick to its plan to hold a more comprehensive fiscal announcement in November 23, when will further detail on how to reduce debt.

Some financial analysts said the government may have to announce the news ahead of time to calm investor nerves.



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