Liz Truss will urge world leaders to join Britain in introducing far-reaching tax cuts despite US President Joe Biden pouring out contempt for the “cascading economy” ahead of their first bilateral talks in New York.
In a speech to the United Nations on Wednesday, the prime minister will argue that the free world must prioritize economic growth to deny authoritarian states like Russia the ability to manipulate the global economy.
However, her embrace of Reagan’s economic policy puts her on a collision course with the Democratic president who tweeted yesterday that he was “sick and tired” of the approach, which he said never worked.
In his latest break with Treasury orthodoxy, Truss vowed Tuesday to review all tax rates to help struggling families and businesses overcome the cost of living crisis. The prime minister’s remarks pave the way for a radical overhaul of the system that could include a new examination of the income tax brackets and come in the news that Friday is planning a stamp duty cut as part of its mini-budget. emergency.
In an interview at the top of the Empire State Building on Tuesday, he told the BBC: “We have to make tough decisions to get our economy back on track. We need to look at our tax rates. So the corporation tax has to be competitive with other countries in order to attract those investments. “
He had already signaled that further tax cuts, in addition to the changes planned for Friday, could be on the way. He told reporters on the plane to the United States: “Lower taxes lead to economic growth, I have no doubt about that.”
The Times reported that Truss believes the cut in stamp duty – which raises around £ 12 billion a year for the Treasury – would help growth by encouraging more people to relocate.
Truss’s first talks with Biden are set against a backdrop of tensions over post-Brexit trade deals in Northern Ireland. Despite the UK’s attempts to separate the issues, the Biden administration has warned that a free trade agreement is unlikely until the Northern Ireland protocol dispute is resolved.
In a move that could disappoint Brexiters, Truss downplayed expectations about the upcoming trade deal, saying, “There are currently no negotiations underway with the US and I don’t expect them to start in the short to medium term.”
US National Security Advisor Jake Sullivan said Biden will use the meeting to “encourage the UK and the EU to come up with a practical outcome that ensures there are no threats to the fundamental principles of the Friday agreement. Holy”.
The two leaders also disagree on their approaches to achieving growth, with Truss advocating the “waterfall” economy during the Tory leadership contest, arguing that it was wrong to see all economic policy through the “lens of redistribution.” “.
Biden, meanwhile, tweeted: “I’m sick and tired of the cascade economy. It never worked. We’re building a bottom-up economy.”
However, Truss should support his economic argument in his keynote speech to the UN, telling other world leaders: “We want people to keep more than the money they earn, because we believe that freedom outweighs education. We are reforming our economy to advance Britain once again.
“The free world needs this economic strength and this resilience to repel authoritarian aggression and win this new era of strategic competition. We will no longer be strategically dependent on those who seek to arm the global economy ‘”.
In a broadcast round on Tuesday, Truss admitted that his tax cut plans will initially benefit the wealthy more than the rest of society, but doubling after reversing a recent national insurance hike would benefit incomes. highest of around £ 1,800 per year, and the lowest income of around £ 7.
“I don’t accept this argument that cutting taxes is somehow unfair,” he told Sky News. “What we do know is that people with higher incomes generally pay more taxes, so when you cut taxes there is often a disproportionate advantage because those people pay more taxes in the first place.
“We should set our fiscal policy on the basis of what will help our country succeed. What that economy will bring to the benefit of everyone in our country. What I don’t accept is the idea that corporate tax cuts don’t help people in general. “
Truss, who is also proposing to lift the cap on bankers’ bonuses, said he is ready to be an unpopular prime minister to take measures he believes will grow the economy. “Yes, yes I am,” she said. “What is important to me is that we make the British economy grow.”
Some Conservative MPs believe that Chancellor Kwasi Kwarteng could bring forward by a year the promise made by his predecessor Rishi Sunak, when Chancellor, to cut income taxes by 1% from 2024. Business groups expect changes to corporate rates and VAT cuts to help with the energy crisis, as well as a longer-term review.
Truss put aside concerns about the pound’s decline and the general state of the economy. “My belief is that Britain’s economic fundamentals are solid,” he said, rejecting claims that interest rates would rise as a result of his approach.
Previously, he said the higher energy bills were a price worth paying to ensure the UK’s safety from foreign attackers, but the cost shouldn’t be passed on to households.