UK Mini-Budget Shakes Stock Market, Benefits Rich | Political news

The British government has presented a new mini-budget to parliament, intending to cut household taxes and energy bills, driving economic growth.

In what represents the most significant tax cut budget since 1972, new finance minister Kwasi Kwarteng’s new budget will see cuts in national insurance, stamp duty and the higher tax rate.

During his speech in the House of Commons on Friday, Kwarteng said: “People will have seen the horrors of [Russia’s President Vladimir] Putin’s illegal invasion of Ukraine. They will have heard reports that their already expensive energy bills could reach as high as £ 6,500 ($ 7,254) next year.

“Mr. President, we would never have allowed that to happen. The prime minister has acted very quickly to announce one of the most significant interventions the British state has ever made, ”she said, referring to the new Prime Minister of the United Kingdom, Liz Truss.

Kwarteng said the budget will address three key issues: energy price guarantee, equal support for businesses, and an energy market financing program.

Prime Minister Liz Truss ruled out an unexpected tax on oil companies to pay for the energy crisis [File: Daniel Leal/AFP]

A national insurance hike announced earlier this year under former finance minister Rishi Sunak will be reversed, saving families £ 330 ($ 368) a year.

The zero stamp duty threshold on home purchases will be doubled to £ 250,000 and raised to £ 425,000 from the previous £ 300,000 for first-time buyers.

At the same time, a plan was presented to reduce the lowest rate of income tax from 20 to 19 percent and reduce the highest rate from 45 to 40 percent.

“High tax rates harm Britain’s competitiveness,” Kwarteng said. “They reduce the incentive to work, invest and start a business. And the higher the taxes, the more people try to avoid them, either they work elsewhere or just work less … rather than devoting time and money to more creative and productive purposes. ”

But in what was considered a controversial move as the country faces a cost-of-living crisis, Kwarteng announced it will lift the European Union’s inherited cap on post-Brexit bankers’ bonuses to revive the financial services sector.

A new era of growth

“Growth is not as high as it should be… We need a new approach for a new era, focused on growth. Our goal, in the medium term, is to reach a growth rate of 2.5 per cent “, said the finance minister.

However, Rachel Reeves, Labor’s chief financial officer, said Kwarteng had prioritized big business and “bankers’ bonuses” over workers based on a discredited theory of a “waterfall economy”.

“The prime minister and the chancellor (finance minister) are like two desperate gamblers in a casino chasing a losing track,” he told parliament.

Since the announcement of the new mini-budget, the British pound has dropped to a 37-year low as radical unfunded tax cuts rocked the market.

Many have reported that the new budget disproportionately benefits the rich.

Jo Maugham, director of the Good Law Project, tweeted that the budget “means that those who earn a million a year will have an extra £ 54,400 ($ 60,700) in their pockets after taxes and NICs. [national insurance contributions]”.

“For those earning £ 25,000 ($ 27,900), the equivalent figure is around £ 280 ($ 312). It’s hard to imagine a worse response to a cost of living crisis ”.

Government tax cuts are expected to cost £ 45 billion ($ 50 billion) by 2026/27.

Reaction from Wales, Scotland

Leaders from devolved regions of the UK have also criticized the tax cut plans.

Mark Drakeford, the Welsh Prime Minister, tweeted, “This #MiniBudget it embodies injustice across the UK.

“The UK government should offer significant support to those who need it most. Instead, they are granting tax cuts to the rich, bonuses to bankers and protecting the staggering profits of the energy companies, ”she said.

Nicholas Sturgeon, the Scottish prime minister, also echoed Drakeford’s remarks and tweeted: “The super rich laugh all the way to the bank proper (though I suspect many of them will also be upset by the Tory moral bankruptcy) as they rise. the numbers of others rely on food banks, all thanks to the incompetence and recklessness of this failed British government. ”

Strikes

The news comes as the Bank of England warned that Britain is sliding into recession as rising fuel and food prices take their toll. Kwarteng said the government will force transport companies to maintain a minimum level of service during the strike and require wage offers to be presented to members during wage negotiations.

He told the country’s parliament: “It is simply unacceptable that the strike is disrupting so many lives. Other European countries have minimum service levels to prevent militant unions from closing transport networks during strikes. So we will do the same.

“And we will go further. We will legislate to require trade unions to submit payment offers to a voting member to ensure that strikes can only be called once negotiations are truly stopped, “she added.

More strikes

However, on Friday, British rail unions announced they would join a series of strikes already planned in October over pay and conditions.

Members of the Transport Salaried Staffs’ Association (TSSA) and Unite will participate in the trade union action in early October.

“To be faced with a three-year wage freeze during the worst cost of living crisis in decades is shameful,” United Secretary General Sharon Graham said in a statement.

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