UK Treasury chief to expedite forecasts
Tax-cutting stimulus was announced last month
LONDON – Britain’s Treasury chief said Monday he will bring forward the publication of the government’s full fiscal statement after facing widespread criticism for not providing details about a multibillion-pound, tax-cutting stimulus package he announced last month.
Kwasi Kwarteng had been expected to publish details of his financial strategy on Nov. 23, two months after he first unveiled plans that included 45 billion pounds ($50 billion) in tax cuts, to be paid for by government borrowing. That plan sparked days of turmoil on world financial markets, sent the British pound tumbling to record lows against the U.S. dollar, and forced the Bank of England to intervene to prop up the bond market.
Kwarteng said Monday he will now set out his medium-term fiscal plan and publish economic forecasts from the independent Office for Budget Responsibility on Oct. 31.
It was another course reversal for the embattled Treasury chief, who last week said he would abandon plans to scrap the top 45% income tax rate for top earners – a policy that had drawn almost universal opposition.
That U-turn was welcomed by many, but Kwarteng and Prime Minister Liz Truss’s Conservative government still face deep skepticism because they have said they will stick to the government’s other tax policies, including slashing the basic rate of income tax and reversing a corporation tax hike planned by the previous Conservative government.
Former Cabinet minister Grant Shapps said the decision to bring forward the full fiscal statement was “a belated but sensible move, given the urgent need to show markets the most transparent view of the U.K. economy.”
Mel Stride, the chair of Parliament’s treasury committee, welcomed the decision and said it could result in a smaller-than-expected rise in interest rates. The government’s unfunded tax-slashing plan has sparked widespread concern that the Bank of England will soon hike interest rates significantly to tame inflation.