UK’s new Chancellor of the Exchequer admits mistakes in UK economic policy
On the 15th local time, the new British Chancellor of the Exchequer, Jeremy Hunt, publicly stated that the previous fiscal policy formulated by the British government was too hasty, especially on issues such as large-scale tax cuts.
Hunter said that the previously drafted fiscal policy was too “blindly optimistic” about the outlook and ignored the basic demands of ordinary people, damaging the government’s credibility. He emphasized that in the current complex and challenging international and domestic environment, using borrowing to finance tax cuts “doesn’t work”, and lowering taxes on the wealthy is a mistake.
The British government announced large-scale tax cuts on September 23 to boost the economy, including the removal of the top income tax rate of 45%. However, this measure is considered to be a tax cut for the wealthy and will increase inequality in the UK. Investors also believe that without cutting government spending, the UK government’s large-scale tax cuts will lead to a wider fiscal deficit.
Sterling fell and British government bonds sold off sharply after the new measures were announced. The Bank of England had to rescue the market urgently, stabilizing financial markets through massive bond purchases. Prime Minister Truss is also facing doubts about his ability to govern inside and outside the Conservative Party. In order to save the slump in approval ratings, Truss fired Chancellor Kwarten on the 14th, urgently appointed Hunter as his successor, and decided to revise the mistakes in the previous plan.