Despite the controversy surrounding the UK government’s plan to foster economic growth, Prime Minister Liz Truss says she would push through the program, addressing all the criticisms several private and public entities thrown at her.
Under the program, the government would cut massive taxes from corporations in an effort to lessen the pressure they are currently dealing with in the face of the energy crisis.
Furthermore, the UK government will increase government borrowing to pay for the subsidy programs it will shell out to businesses and individuals to cap the energy prices within six months or more.
The Bank of England has recently made its move to alleviate the problem, particularly on pension funds.
But, while the spotlight turned to the government, Truss primarily blamed the conflict between Russia and Ukraine as the main driver of spiking global inflation.
“We had to take urgent action to get our economy growing, get Britain moving, and also deal with inflation, and of course, that means taking controversial and difficult decisions,” Truss said in an interview.
“But I’m prepared to do that as prime minister because what’s important to me is that we get our economy moving.”
Truss, 47, served as the UK’s foreign minister before being promoted as the Prime Minister and took office last September 6. She replaced Boris Johnson and became the 4th prime minister within just six years in British politics.
The frequent replacement of the leaders in the UK can be attributed to the financial turbulence the country is facing, which was exacerbated by several issues, including the pandemic, inflation, energy crisis, and climate crisis.
Read Also: IMF Calls Out the UK Government for its Plans to Cut Taxes and Increase Foreign Borrowing
Losing confidence
The plan announced by finance minister Kwasi Kwarteng challenged the positive conception of the new administration led by Truss.
In addition to the decreasing value of the pound and the worsening global market conditions, several entities in and out of the country are questioning the competence of Truss.
“The mini-budget was absolutely essential in resetting the debate around growth and focusing us on delivering much better growth outcomes,” Kwarteng said.
In a new poll led by YouGov, the Labour party took the lead over the Conservatives by 33 points, implying a decline in the confidence of the Truss administration.
This week, the survey shows 54% support the Labour party and 21% for the Conservatives.
This led US billionaire Ken Griffin to become worried about the damage it could do to the reputation of Britain among the world markets.
“It represents the first time we’ve seen a major developed market, in a very long time, lose confidence from investors,” he said.
Another billionaire, Ray Dalio, shared his thoughts and said: “It doesn’t stimulate the economy; productivity is what stimulates the economy over the long run.”
“I would think there would be an understanding of the mechanics of that by the government, and that’s why it’s concerning.”
“Due to the recognition that the big supply of debt that will have to be sold by the government is much too much for the demand. That makes people want to get out of debt and currency. I can’t understand how those who were behind this move didn’t understand that. It suggests incompetence.”
Read Also: Billionaire Ray Dalio Raps UK Government, says Fiscal Plan ‘suggests incompetence’
This is the ‘right plan’
Truss is confident with her administration’s plan and said the government would not change its path. If implemented, the unfunded tax cuts should reform sectors, including childcare, immigration, and financial regulation, among others.
The UK Treasury said the government would reveal a more detailed explanation regarding the government’s borrowing and spending scheme on November 23.
“This is the right plan,” said Truss. In addition, she stressed that she would not reverse their decision.
Photo Credit: Adrian Dennis
Source: Reuters
