In less than 40 days in office, British Prime Minister Liz Truss fired Treasury Secretary Kwasi Quarteng and scrapped some of the unpopular economic packages in a desperate effort to survive politically. As financial markets plunged into turmoil, Truss accepted on Friday that the government’s plans for unfunded tax cuts went “faster and faster” than investors had expected, she said. Here’s everything that has happened since Truss became Prime Minister of the United Kingdom. Truss won the leadership contest. On 5 September, then Foreign Minister Liz Truss was named leader of the ruling Conservative Party and took office as Britain’s next Prime Minister. The country faces a cost of living crisis, industrial unrest and a recession. Long a leader in the race to replace Boris Johnson, Truss became the Conservative’s fourth prime minister since the 2015 election. She said that 47-year-old Truss has promised that she will act quickly to address the UK’s cost of living crisis, and that within a week she will develop a plan to address rising energy bills and secure future fuel supplies, she said. said. During her leadership campaign, Truss signaled that she would challenge economic practices by withdrawing tax hikes and cutting other levies, which some economists said would increase inflation. On top of that, her promise to review remittances while protecting the Bank of England’s independence will later prompt some investors to forgo the pound and treasury bonds. Truss Appoints Cabinet On September 7, just hours after ascending to the highest office, Truss appointed her new Cabinet at the official request of Queen Elizabeth II. A major overhaul brought 15 new faces to senior government positions, leaving 16 from the previous cabinet to the newly formed cabinet. Among the most dignitaries was Finance Minister Kwasi Kwarteng. He replaced Nadim Jahawi, who got a job in July. Quarteng has served as business secretary since becoming the first black Conservative cabinet minister in January 2021. Queen Elizabeth II Died On September 8, her 96-year-old monarch died. A 10-day period of national mourning followed, and on September 19 her Queen’s funeral was held. Kwarteng Announces Mini Budget On 23 September the UK government announced a new mini budget in Parliament to reduce household taxes and energy bills. It is driving economic growth. The most significant tax cut since 1972, Kwarteng’s all-new budget includes cuts in national insurance, stamp duty and top tax rates. Kwarteng said the budget will address three key points: ensuring energy prices, providing equal support to businesses, and planning to finance the energy market. A proposal has been made to lower the minimum income tax rate from 20% to 19% and the highest rate from 45% to 40%. Financial markets in turmoil Kwarteng’s tax cuts and energy price freezes have had the opposite effect, warning traders that debt will surge to pay incentives to boost the UK’s economy threatened by recession. Following the budget, yields on British government bonds soared, and on 26 September the pound hit an all-time low of $1.0350. Bank of England intervention A very unusual intervention, the International Monetary Fund (IMF) said on 27 September that it was “closely monitoring” the progress and urged the London government to change its course. The next day the Bank of England intervened to strengthen market confidence in the UK after the IMF criticized the UK budget as “potentially exacerbating inequality and exacerbating inflation”. The BoE has announced a temporary purchase of £65 billion ($73 billion) of long-term UK government bonds “to restore orderly market conditions”. Truss defended his economic plan On September 29, Truss defended his economic plan and ignored negative reactions from financial markets, saying he was willing to make “hard decisions” for economic growth. Truss said the UK is facing “a very, very difficult economic period” in his first public comment after the turmoil sparked by the mini-budget. But she said the problem is global and has spurred a full-fledged Russian invasion of Ukraine. U-Turn at Top Tax Rate In a humiliating U-turn, the government withdrew the country’s plan to cut the top income tax rate. Announcing the government’s U-turn, Kwarteng said proposals to lower the top tax rate, which account for around £2 billion ($2.2 billion) of the total £45 billion ($0.4 billion) of tax cuts, were “distracted”. “It’s our top priority to address the challenges our country faces,” he said in a statement released hours before his keynote speech at the Conservative Party’s annual meeting. On October 14, she appointed Jeremy Hunt as Prime Minister on behalf of Kwarteng and canceled the corporate tax cut plan, scrapping a key part of the economic plan, causing market turmoil. Truss said he had decided to keep the hike, which would increase public finances by £18 billion ($20 billion), and the Bank of England intervention has come to a close.
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