Latest mini-budget LIVE: Kwasi Kwarteng set to announce tax cuts for millions

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wasi Kwarteng has unveiled a mini budget that offers billions of pounds in tax cuts – including a surprise decision to scrap the top 45% rate of income tax paid by the UK’s wealthiest.

The Chancellor announced sweeping measures to revive the economy at the much-anticipated “fiscal event” on Friday morning.

The government calls it a “plan for growth” at a time when the UK is facing a cost of living crisis, recession, runaway inflation and rising interest rates.

The Chancellor told MPs that the planned rise in corporation tax would be reversed as he announced the cap on bankers’ bonuses would be scrapped.

He also announced that the basic rate of income tax would be reduced to 19 pence in the pound from April 2023. And he said that the 45% higher rate of income tax would be “abolished”.

Mr Kwarteng said his economic vision would “turn the vicious cycle of stagnation into a virtuous cycle of growth”.

But Shadow Chancellor Rachel Reeves said the strategy amounted to “an admission of 12 years of economic failure” under successive Tory governments.

The Labor MP described the Prime Minister and Mr Kwarteng as ‘two desperate gamblers in a casino chasing a losing run’.

Live updates

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Former US Treasury chief criticizes mini-budget

A former US Treasury secretary has sharply criticized Chancellor Kwasi Kwarteng’s economic policies, warning that the pound could fall below parity with the US dollar.

Larry Summers told Bloomberg: “It makes me really sorry to say this, but I think the UK is behaving a bit like an emerging market turning into a submerged market…

“There is nothing in the pattern of market response in the UK that suggests anything other than fear rather than confidence in the policy approaches being taken.

“It wouldn’t surprise me if the pound ends up falling below a dollar if the current political trajectory is maintained.”

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It’s a good day for the UK, says Chancellor

Kwasi Kwarteng said Friday was a “very good day for the UK”.

The Chancellor told reporters in Kent: “I think it’s a very good day for the UK because we have a plan for growth.

“We’re very, very optimistic about what we can do as a country. We were dealing with low growth and we want a high growth economy and that’s what this morning was all about.”

Pressed on the fairness of tax cuts across the board, he said: ‘The Prime Minister campaigned for leadership on the basis that we were going to cut taxes and that is exactly what we did.

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Market response to unprecedented budget, says ex-treasury chief

Lord Nick Macpherson, the former Treasury chief, said he would not recall a budget intervention triggering such a strong market response.

He said: “I have worked on about 60 tax events in 31 years. I don’t recall there being such a strong market reaction as today. The £ is currently down more than 3% against the $, 1.8% against the € and 2.5% against the ¥. And the cost of borrowing up 40 bp in the short term and 20 bp in the long term.

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Nearly two-thirds think Kwarteng’s tax cuts will benefit the wealthy more

Almost two-thirds of people think the Kwasi Kwarteng tax cuts will benefit the wealthy more, according to a YouGov survey.

Of around 9,400 adults surveyed, 63% said the changes would help wealthier people more, 3% said poorer people and 9% believe both groups will benefit equally.

More than half of respondents (52%) said the Chancellor’s measures would not be very or not at all effective in growing the UK economy, while only 19% said very or somewhat effective.

When asked about the impact on people’s lives, 28% said it would eventually get worse, 34% said the changes wouldn’t make a difference, and 19% said it would eventually get better.

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Kwarteng rejects suggestion that his economic plan is a ‘gamble’

Kwasi Kwarteng rejected the suggestion that his economic announcement in Parliament on Friday was “a gamble”.

During a visit to Berkeley’s modular housing factory in Ebbsfleet, Kent on Friday, he told reporters: “It’s not a bet.

“What’s a gamble is thinking you can keep raising taxes and getting prosperity, which clearly wasn’t working.

“We can’t have a tax system where you get a high of 70, so the last time we had tax rates at that level before my tax cuts was actually before his defunct majesty accedes to the throne.

“It was completely unsustainable and that’s why I’m delighted to have been able to reduce the taxes on the track this morning.”

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Watch: The Chancellor’s Mini Budget at a Glance

Chancellor’s Mini-Budget: in brief

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Former Tory minister calls tax cuts ‘bad’

Former Tory minister Julian Smith has said the chancellor’s decision to give the wealthy a ‘huge’ tax cut was ‘wrong’.

“In a statement containing many positive measures for business, this huge tax cut for the very wealthy at a time of national crisis and real fear and anxiety among working people and low-income citizens is a mistake,” he tweeted.

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Government ‘completely out of touch with the public’, says Davey

Liberal Democrat leader Sir Ed Davey said the Chancellor’s budget mini-speech demonstrated the Government was “totally out of touch” with the general public.

Speaking on College Green on Friday, Sir Ed said the fact that the pound hit a 37-year low against the dollar during Kwasi Kwarteng’s speech in the House of Commons also signaled that global investors were “very worried” about the government’s new economic strategy. .

He said: “This budget shows how totally out of touch the Conservatives are with people. Millions of families and retirees are struggling with skyrocketing energy bills, food bills, mortgage bills, and it seems the Conservatives don’t understand or care.

“We needed a plan to help people, and this is not a plan for our economy.”

He added: “It seems to me that investors around the world are very worried about this economic package, whether it’s the currency markets with the fall of the pound, whether it’s the cost of government borrowing, which has gone up as a result of that, I think people don’t trust the Conservatives.

“So it’s not just struggling members of the public who feel the government is out of touch, it’s also international investors.”

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Beverage industry welcomes duty freeze

A planned increase in alcohol taxes was among the measures put on ice by the Chancellor in the Commons on Friday.

In a mini-budget that put tax cuts front and center, Kwasi Kwarteng announced that an increase in duty rates on beer, cider, wine and spirits would be reversed.

Along with an 18-month transitional measure for wine tariffs, he also said he would extend milking relief to small barrels to help support small breweries.

The Scotch Whiskey Association welcomed the chancellor’s decision, saying the government had “delivered”.

“The duty freeze will not only support our sector, but also the hospitality industry and the wider economy,” he said.

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IFS: Chancellor ‘bets the house’ on risky borrowing strategy

The Institute for Fiscal Studies (IFS) think tank analyzed the Chancellor’s statement and said he was “betting the house” on a risky strategy.

Director Paul Johnson said: “Injecting demand into this high inflation economy leaves the government pulling in the exact opposite direction from the Bank of England, which is likely to raise rates in response.

“Early signs are that the markets – which will have to lend the money needed to fill the gap in the government’s fiscal plans – are unimpressed. It’s worrying “.

He said Cabinet members could be forgiven for having whiplash, such is the sudden change in the government’s economic policy.

“Mr. Kwarteng is not just betting on a new strategy, he’s betting the house,” he said.

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