Truss tries to reassure the public on UK’s economic plan
On Sunday, October 2, the Prime Minister of the United Kingdom, Liz Truss, attempted to reassure her party and the general public by stating that she should have done more to “lay the ground” for an economic plan that resulted in the pound falling to record lows and an increase in the cost of government borrowing.
Truss, who has been in office for a little less than a month, adopted a more conciliatory tone on the first day of the annual conference of the Conservative Party, which she leads, by promising that she would support the general population over a challenging winter and beyond.
She defended her “growth plan,” which is a package of tax-cutting measures that investors and many economists have criticized for setting out billions of pounds of spending while offering few details on how it would be paid for in the short term. Her “growth plan” has been criticized for setting out billions of pounds of spending while offering few details on how it would be paid for in the short term.
Truss suggested that critics did not realize the depth of Britain’s problems and that she should have done more to explain them. This is an argument that market traders and investors have dismissed as a reason for the decline in the value of the pound and the increase in the cost of borrowing money over the past week.
However, she did not deny that the plan would require spending cuts for public services. In addition, she refused to commit to increasing welfare benefits in line with inflation while endorsing a tax cut for the wealthiest individuals. This has caused some conservative lawmakers to worry that it will hurt their chances in an election that is scheduled to take place in 2024.
She told the BBC in the city of Birmingham, which is located in the middle of England, that “I understand their anxieties about what has transpired this week.”
“I do stand by the package that we presented, and I do stand by the fact that we revealed it swiftly because we had to move,” the president said. “However, I do accept that we should have prepared the groundwork more thoroughly.”
While acknowledging his lack of expertise in economics, the chairman of the Conservative Party, Jake Berry, speculated that the markets may have overreacted to the news. According to what he said to Sky News, “Let’s see where the markets are in six months’ time.”
Truss was sworn in as prime minister on September 6, but two days later, Queen Elizabeth passed away. As a result, the first few days of the new prime minister’s term were mostly consumed by the national mourning period, during which politics were all but put on hold.
Her team believed she had already revealed her objectives during a leadership battle against competitor Rishi Sunak, who had argued against immediate tax cuts. Two weeks after gaining office, she launched her proposal, and they felt she had already signaled her plans.
However, the magnitude of the unfunded cuts caused the markets to panic. Following a significant drop in value, the pound has subsequently rebounded thanks to intervention from the Bank of England (BoE), which is the central bank of Britain; nonetheless, the cost of borrowing money for the government has not decreased significantly.
According to investors, the government will need to put in a lot of effort to rebuild trust. However, the Bank of England’s emergency round of bond-buying is only scheduled to run until October 14, leaving Truss with little time to work with.
Aside from the reaction of the market, the economic plan proposed by Truss caused concern inside the Conservative Party, particularly regarding the elimination of the 45% income tax bracket that is now in place.
Some members of the party are concerned that they run the risk of being labeled “the nasty party” as a result of their policies, which include lowering taxes on the wealthiest individuals while doing little to better the lives of those who are at the greatest risk.
When business minister Jacob Rees-Mogg arrived at the conference center, he was heckled by a dozen demonstrators who yelled “Not welcome here,” which may be an indication of what is to come. It was necessary for the cops to accompany him.
Michael Gove, a former minister who spent a significant amount of time at the center of the government, has also ridiculed the party’s plans to eliminate the highest tax rate, giving the impression that he might vote against it. Andy Street, the Conservative mayor of Birmingham, has stated that he would not have made that policy.
At one of the events taking place during the conference, Gove was heard saying, “It is going to be very, very difficult to defend that it is okay to lower welfare payments while we are cutting taxes for the richest.”
Truss maintained that the move was part of the simplification of the tax system and added that the choice on the highest tax was taken by her finance minister, Kwasi Kwarteng. However, she acknowledged that the decision on the top tax was made by Kwarteng.
Truss responded, “No, we didn’t, this was a decision that the chancellor made,” when she was asked whether all of the top ministers in her Cabinet had been informed in advance of the change.
She also said that politicians spend an excessive amount of time thinking about how their plans were accepted by the public. She said that she was focused on generating growth rather than worried about how the public would react to her policies. Truss has stated on multiple occasions that she is not afraid of making decisions that are unpopular.
However, she was unable to provide a satisfactory response when questioned about whether or not the elimination of some taxes would necessitate reductions in the provision of public services. Instead of denying this, she stated that she wished for the greatest available services, which provide an excellent return on investment for taxpayers.