Finance Minister Kwasi Kwarteng confirmed on Monday morning that the government would abandon plans to cut taxes for the country’s highest earners.
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Britain’s Finance Minister Kwasi Kwarteng said on Monday the government would not be distracted from delivering on its growth plan, shortly after the government radically abandoned plans to cut income tax for highest income in the country.
“What a day,” Kwarteng said as he addressed attendees at the Conservative Party’s annual autumn conference in Birmingham, central England.
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“It’s been tough. But we have to focus on the job at hand. We have to move on, no more distractions,” he continued. “We have a plan, and we have to get on it and implement it. This is what the public expects from the government.”
Earlier today, the UK government canceled a plan to scrap the top rate of 45% income tax paid on earnings above £150,000 ($166,770) a year following a growing public backlash and major market turbulence.
Alongside new Prime Minister Liz Truss, Kwarteng had spent the past 10 days defending the policy even as the pound fell to historic lows, mortgage deals were pulled from the market and UK government bonds began to fall. sell at a historical rate.
“I can be frank, I know the plan presented just 10 days ago has caused a bit of turbulence,” Kwarteng said. “I get it. I get it. We are listening and have listened – and now I want to focus on delivering the key elements of our growth program.”
The proposed tax cut was widely seen as a politically toxic move at a time when the country is facing a deepening cost of living crisis.
“We understand and we have listened,” Kwarteng said in a statement Monday morning.
“It is clear that the abolition of the 45p tax rate has become a distraction from our primary mission to address the challenges facing our country. Accordingly, I am announcing that we are not proceeding with the abolition of the rate tax of 45p”, he added.
Speaking to the BBC on Sunday, Truss defended the unfunded measures in the government’s so-called mini-budget, but acknowledged she could have “done a better job of laying the groundwork” for the announcements.
Economists and analysts were skeptical that the U.K. government’s U-turn on tax cuts for the wealthy would ease market jitters, noting however that it is only a small part of the equation in terms of broader spending plans.
The pound traded up more than 0.9% at $1.1262 in afternoon trading in London.
– CNBC’s Jenni Reid contributed to this report.