Good morning. As the fall-out from the chancellor’s mini-budget continues, with the pound tumbling and markets reeling, Kwasi Kwarteng has attempted to defend the government’s course of action.
Writing in the Daily Telegraph, he said:
The British taxpayer expects their government to work as efficiently and effectively and possible, and we will deliver on that expectation.
Not all the measures we announced last week will be universally popular. But we had to do something different.
We had no other choice.
His announcements just over a week ago included a cut in income tax from 45p to 40p in the pound for the highest earners. Other taxpayers received a 1p cut in income tax and will get money from a U-turn in the rise in national insurance. The chancellor said they would all help to increase growth.
However there was a strong market reaction to the package, which amounted to the biggest tax cuts in 50 years. The Bank of England subsequently spent billions of pounds buying government debt to shore up pensions schemes. It has also indicated that interest rates are like to rise significantly, which has led to jumps in mortgage rates and lenders pulling many deals.
Responding to the markets’ reaction, Kwarteng added:
Even in the face of extreme volatility in global markets, with major currencies wrestling an incredibly strong US dollar, we will show financial markets and investors that our plan is sound, credible and will work to drive growth.
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