British PM Liz Truss takes U-turn on tax amid market turmoil

Birmingham, October 3

British Prime Minister Liz Truss was forced on Monday into a humiliating U-turn after less than a month in power, reversing a cut to the highest rate of income tax that helped spark turmoil in financial markets and a rebellion in her party. Finance minister Kwasi Kwarteng said the decision was taken with "humility and contrition", after some lawmakers reacted with fury to suggestions that public and welfare spending could be cut to fund tax cuts for the richest.

Addressing the Conservative Party's annual conference where lawmakers and supporters had gathered, Kwarteng acknowledged the "little turbulence" of the last week, but argued the government needed to press ahead with a new course to revive growth. “What a day,” he said, to muted applause. "It has been tough, but we need to focus on the job in hand, we need to move forward. No more distractions.”

Truss - elected as prime minister by party members but not the broader public - is seeking to jolt the economy out of a decade of stagnant growth with a 1980s-style plan to cut taxes and regulation, all funded by vast government borrowing.

Signalling a break with “Treasury orthodoxy”, she and Kwarteng also fired the most senior official in the government's finance department and released the tax cut plan without accompanying forecasts on how much it would cost. Investors, used to Britain being a pillar of the global financial community, were aghast. — Reuters

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