‘The strategy is do everything now’: Truss and Kwarteng go big
Spectator (UK)Sep 22, 2022
UK Chancellor Kwasi Kwarteng announced the biggest tax-cutting budget in five decades on Friday when he outlined plans for reductions in the top 45% rate of income tax, national security, and stamp duty worth £45B. The news prompted the pound to fall by almost 2% against the dollar to almost $1.10 - a 37-year-low.
The new budget will see the top rate of income tax on more than £150K per year reduced from 45% to 40%, the 1.25% rise in national insurance — introduced just a few months ago — reversed, and the threshold at which first-time buyers pay stamp duty — a kind of property tax — increased from £300K to £425K.
This is a bold and thoroughly conservative economic strategy from the Tories for the first time in years. Truss is in a race against time, facing the prospect of an election in two years and an impending recession. The conservatives are finally reprioritizing boosting growth and shrinking the state.
The Tories are gambling with the nation's finances with a set of drastic tax cuts that senior economists have said are unlikely to significantly boost GDP. The Bank of England has signaled that the UK is already in recession and now Truss's policies will cause further pain by adding to inflationary pressures.
There is a 50% chance that the UK's annual inflation rate will be at least 5.92% by 2023, according to the Metaculus prediction community.