Tax-Cutting Plan Is ‘Urgent Action’ Needed to Get UK Economy Growing: Truss

Prime Minister Liz Truss speaking in the House of Commons, London, on Sept. 8, 2022. House of Commons via PA

UK Prime Minister Liz Truss has defended the government’s tax-cutting plan which has led to turmoil in the financial markets, calling it an “urgent action” needed to get the economy growing.

Chancellor Kwasi Kwarteng on Sept. 23 unveiled the biggest package of tax cuts in half a century, which was aimed at spurring growth in the UK economy but sparked panic among investors concerned about increased government borrowing, causing the pound to fall and borrowing costs to soar.

British Chancellor of the Exchequer Kwasi Kwarteng walks outside Number 10 Downing Street, in London on Sept. 6, 2022. Toby Melville/Reuters

On Wednesday, the Bank of England launched an emergency government bond-buying programme to prevent borrowing costs from spiralling out of control and stave off a “material risk to UK financial stability.”

In her first public comments since the market chaos began, Truss defended the tax-cutting measures as the “right plan,” though she admitted the government’s decisions have been “controversial.”

‘Difficult Decisions’

Truss told BBC Radio Leeds on Thursday: “We had to take urgent action to get our economy growing, get Britain moving, and also deal with inflation.

“Of course that means taking controversial and difficult decisions but I am prepared to do that as prime minister because what is important to me is that we get our economy moving, we make sure that people are able to get through this winter, and we are prepared to do what it takes to make that happen.”

She acknowledged the measures announced last week would take time to have an effect and sought to assure that the chancellor was working “very, very closely” with Bank of England governor Andrew Bailey.

“We are facing very difficult economic times. We are facing that on a global level,” she told BBC Radio Norfolk.

“Of course lots of measures we have announced won’t happen overnight. We won’t see growth come through overnight. What is important is that we are putting this country on a better trajectory for the long term.”

Tax Cutting ‘Helps Everybody’

As she toured regional BBC radio stations, Truss faced questions over the fairness of her tax-cutting policy, which some have argued disproportionately benefits the rich.

She told BBC Radio Nottingham: “The reality is, people having lower taxes across the board—everything from national insurance to corporation tax to income tax—helps everybody because it helps grow the economy.

“It’s not necessarily popular to keep corporation tax low but I want to make sure we do because I want to make sure we attract investment into this country.”

She added: “Of course people who are better off tend to pay more taxes, so there’s a disproportionate effect there.”

Asked if there was any evidence that cutting the taxes of the rich reduces inequality, she said: “There’s plenty of evidence that if you have very high taxes they lead to lower economic growth.”

PA Media contributed to this report.