Truss ‘prepared to be unpopular’ in attempt to grow UK economy
CHANCELLOR TO SET OUT ‘FISCALLY RESPONSIBLE’ STATEMENT ON TAX AND SPENDING PLANS
PRIME MINISTER Liz Truss said her government needed to review tax rates and take difficult decisions to stimulate economic growth, during a trip to New York on Tuesday (20).
Truss, who took office earlier this month but after the death of the Queen, has had little opportunity to flesh out her vision for the country, said she was prepared to be take unpopular decisions.
“We do have to take difficult decisions to get our economy growing,” she told the BBC, citing her decision to spend an unspecified amount of public money on a package to shield businesses and consumers from soaring energy costs. “We have to look at our tax rates – corporation tax needs to be competitive with other countries so we can attract that investment.”
Asked by Sky News in a separate interview if she was prepared to be unpopular over her policies, she said: “Yes, yes, I am. What is important to me is that we grow the British economy.”
Talking about the fall in the value of sterling, which is hovering barely above its lowest level since 1985, ahead of expected interest rate hikes from the Bank of England and the Federal Reserve, Truss said: “My belief is that Britain’s economic fundamentals are strong.
“We have relatively low debt compared to the rest of the G7, we have strong employment – although we do need to help more people who are currently economically inactive go into work - we have a great enterprise culture.”
The chancellor, Kwasi Kwarteng, is due to make a fiscal statement on tax and spending plans on Friday (23).
“What the chancellor (Kwarteng) will be outlining on Friday is his approach showing that we are fiscally responsible. We’re going to carry out our policies in a fiscally responsible way,” she said.
A Treasury source said it will not be a full budget. According to some media reports, Kwarteng was expected to outline plans on cutting taxes and boosting growth, amid forecasts that rocketing inflation will spark a UK recession this year.
Analysts predict Truss’s energy-freeze plan – which was announced soon after she took charge – could easily top £100 billion, paid for via increased borrowing, rather than extending a windfall tax on oil and gas giants.
In the wake of soaring profits for the likes of energy majors Shell and BP, unions are demanding a far higher windfall tax than unveiled earlier this year by former chancellor Rishi Sunak.
Some reports also said Kwarteng could axe a bankers’ bonus cap, in place since 2014 and a legacy of EU membership.
Following his appointment, Kwarteng vowed that post-Brexit financial sector reform would play an “integral” part in his role as chancellor.
Economists are, meanwhile, fearful that Kwarteng’s measures will further ravage public finances, which are already reeling from pandemic expenditure.
“Kwarteng’s mini-budget will be defined by an unprecedented energy support package for households and businesses in the midst of a materially weaker macro backdrop,” said Deutsche Bank senior economist Sanjay Raja.
“Combined with unfunded tax cuts, our base case is for a material deterioration in public finances.” (Agencies)