LONDON – (AP) – Britain’s Prime Minister Liz Truss said on Sunday that she could have done a better job laying the groundwork for her package of unfunded tax cuts, but insisted she would push ahead with an economic plan that would end financial turmoil has caused markets and weakened the country’s public finances.
Truss acknowledged Britain was facing “a very turbulent and turbulent time” but said her policies will result in a “high growth, low tax economy” in the long run.
The comments are unlikely to reassure Truss’ Conservative Party, which opens its four-day annual conference on Sunday in the central English city of Birmingham amid plummeting poll numbers and rising public discontent.
Truss took office less than a month ago and vowed to radically transform the UK economy to end years of sluggish growth. But the government’s September 23 announcement of a stimulus package that includes 45 billion pounds ($50 billion) of tax cuts to be paid for by government bonds sent the pound to a record low against the dollar.
The Bank of England was forced to step in to prop up the bond market and fears that the bank would soon be raising interest rates caused mortgage lenders to pull out of their cheapest deals, causing turmoil among homebuyers.
“I learned from that,” Truss told the BBC. “I will make sure that we lay the foundations better in the future.”
Truss insisted Britain’s economic woes were part of a global spike in inflation and energy prices triggered by Russia’s invasion of Ukraine.
To calm the market turmoil, Truss and her finance minister, Kwasi Kwarteng, have announced that they will present a medium-term fiscal plan on November 23, along with an economic forecast from the independent Office for Budget Responsibility.
Many economists and many conservatives say this means weeks of more economic turmoil lies ahead. Michael Gove, who served as a senior minister in previous Conservative governments, said the announcement “needs to be brought forward” and that some parts of the stimulus package need to be dropped.
Gove said there was “insufficient recognition at the top of government of the scale of the changes needed”.
Many Conservative lawmakers are concerned that a leader chosen to replace Prime Minister Boris Johnson over her buoyant promises of economic growth has set the party on the fence about defeat in the next general election, due in 2024. Opinion polls suggest the opposition Labor Party is opening up a respectable lead.
“I will do what I can to win the hearts and minds of my colleagues across the Conservative Party,” Truss said – but that doesn’t seem to imply a change of course.
Truss said she would not drop the most unpopular part of her stimulus package, a decision to scrap the top 45% rate of income tax paid on earnings over £150,000 ($167,000) a year. And she wouldn’t say whether cuts in welfare and public services are needed to pay lower taxes.
“I think politics has focused too much on the looks or the looks of things,” Truss said. She said she is confident her policies will allow the economy to grow by 2.5% a year – a target Britain has failed to meet in years.
Labor Party economy spokeswoman Rachel Reeves accused the Conservative government of “conducting some kind of crazy experiment with the UK economy” and ignoring “the anxiety and fear” felt by millions of ordinary people.
“The idea that the trickle-down economy will somehow deliver the 2.5 percent growth that we all want to see is for the birds,” Reeves told the BBC.
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