Britain continues to face turmoil as economic and political turmoil continues

LONDON – Britain’s new Prime Minister Liz Truss faced her first major challenge this week since taking office a month ago, presenting and then backing away from Controversial income tax cut For high-income earners, it was part of its budget plan aimed at offsetting the country’s deepening economic crisis.

Truss’ unusual move on Monday, which appeared to be a response to widespread criticism that last week plunged the pound to an all-time low, ended up alarming the new prime minister’s Conservative Party and prompting some to question whether It should be overthrown. .

Truss, 47, won a leadership contest on September 6 after a fierce internal battle to replace former Prime Minister Boris Johnson as Conservative Party leader and prime minister.

British Prime Minister Liz Truss listens to British Chancellor of the Exchequer Kwasi Quarting speaking at the Conservative Party Conference at the International Conference Center in Birmingham, England, on Monday, October 3, 2022. British Government

The British economy is seeing an 11% drop in production, the biggest decline since 1709

A few days before the death of Queen Elizabeth II, and as Britain faces rising inflation driven by soaring food and energy prices, Truss promised to rebuild the economy as the country looks to keep its course post-Brexit, and the decision to leave the European Union. European Union in 2016; the recent COVID-19 pandemic; The impact of the Russian war on Ukraine.

Some critics have blamed Brexit for the problems, but Niall Gardiner, director of the Heritage Foundation’s Margaret Thatcher Center for Freedom, told Fox News Digital that this is not the case.

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Gariner said it was “not because Britain is leaving the European Union.” [but] As a result of excessive government spending during the COVID era, rising energy costs, and a lack of pro-growth policies. The eurozone is doing worse than the UK, with high inflation and a massive energy crisis.”

British Prime Minister Liz Truss, center, arrives for the annual Conservative Party conference at the International Conference Center in Birmingham, England, on Monday, October 3, 2022. (Aaron Chown/PA via AP)

However, the UK government’s announcement of a new The stimulus package amounting to 45 billion pounds ($50 billion) in tax cuts – which will be paid back by government borrowing – has caused economic turmoil both in the UK and abroad.

Thatcher’s classic approach that would have lowered income taxes on the country’s top earners and eliminated maximum bonuses for bankers has been harshly criticized because it came at a time when millions of Britons faced high energy bills, dubbed the cost of living crisis. The worst in a generation.

The proposal pushed the pound to an all-time low against the dollar and Forced the Bank of England Take an emergency step of $70 billion to buy bonds in order to stabilize the currency. The audacious plan also appeared to bolster rival Labor, putting its leader Keir Starmer ahead in the polls, which has fueled suspicion within Truss’ own party.

Initially, Truss and Chancellor of the Exchequer Kwasi Quarting defended the plan, but in a dramatic turnaround at the Conservative Party’s annual conference in Birmingham on Monday, they announced they would abandon the most controversial parts of the plan, a move that immediately boosted the pound.

“The British government has unveiled a series of major pro-growth tax cuts to launch the British economy, which has faced massive headwinds over the past few years, and Liz Truss, as committed Thatcher believed in free market policies,Gardiner noted.

He also noted that while the proposal drew criticism from the Biden administration and the International Monetary Fund, mostly due to cuts to first-tier taxpayers, he said the reversal “sent the wrong signal.”

Liz Truss meets people at the top of the Conservative Party

British Prime Minister Liz Truss arrives to hear Chancellor Kwasi Quarting’s speech at the Conservative Party’s annual conference at the International Conference Center in Birmingham, on Monday, October 3, 2022 (Stefan Rousseau/PA via AP) (AP newsroom)

Larry Summers slams UK tax charges as ‘totally irresponsible,’ warns of global crisis

“It is imperative that the British government aggressively pursue tax cuts,” he said. “The shift is not sending the right message at this time, and in fact it is undermining the case the British government is taking for an agenda to cut taxes.”

Gardiner concluded that “it is extremely important for the Conservative government to continue on its course in terms of the big picture”, adding: “Implementing further tax cuts and a pro-growth agenda based on economic freedom and liberty, this is absolutely vital to revitalizing the British economy.”

Truss, Quarting, Flip Flip has been viewed with caution by elements of the Conservative Party, with some suggesting it may be over before it even began because the rollback of politics has exposed its weaknesses, which the opposition will likely exploit until there is another national election within two years.

Alan Mendoza, executive director of the Henry Jackson Society, told Fox News Digital, however, that “the prime minister had no choice but to change the tax cuts to their high rates because he didn’t have the numbers to win the vote on.”

“Conservative MPs are concerned about the perception that tax cuts will help the rich during a cost-of-living crisis that mostly affects the poor,” he said, adding that “the biggest problem for Truss is that markets believe the UK economy is so weak that her entire tax cut plan may You need to get rid of them unless the chancellor can restore confidence by revealing his spending plans.”

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Mendoza also said the UK crisis should be “a lesson for the US and Europe: don’t announce tax cuts without explaining how you’ll pay for them, and be wary of outstanding debt in an era of uncertain economic growth, as the markets will make you pay for it.”

The Associated Press contributed to this report.

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