Just a month after coming to power, the Prime Minister United KingdomLiz Truss faces her first major government crisis.
The announcement of a fiscal plan three weeks ago, offering a series of rate and tax cuts, triggered a broadly negative response from markets. Finance Minister Kwasi Kwarteng resigned this Friday (14).
In a brief speech after a day of much uncertainty, with the prime minister’s resignation under discussion, Truss reaffirmed that the government would back down on the plan. Faster than markets expected”
But he insisted he would remain prime minister to fulfill his “mission” to grow the economy.
“I am determined to deliver what I promised – to deliver a fast-growing and prosperous England to help weather the storm we face,” Truss said in comments on Tuesday afternoon.
He took over the UK government after Boris Johnson resigned on 6 September.
Below we list some key points needed to understand the imbroglio threatening the Prime Minister’s government.
Announced on September 23, Kwasi Kwarteng’s economic package called for historic tax cuts and massive debt increases.
Key features of the plan include scrapping the UK-wide rise in corporate tax from 19% to 25% – due to take place in April 2023.
At the same time, the basic income tax rate will be cut from 20% to 19% in April 2023 – a year earlier than planned – saving 31 million people an average of £170 (about R$1,000) more per year.
According to calculations, the project will cost the public exchequer 45 billion pounds (R$ 266 billion).
Kwasi Kwarteng was minister for 38 days – Photo: EPA
The package was a ploy to stimulate the economy at a time when the country was suffering from hyperinflation and was about to enter recession.
However, after the plan was announced, the British currency fell to an all-time low against the dollar, borrowing costs rose sharply, and the Bank of England announced plans for a bond recall.
Before his resignation, Kwarteng had already backed away from some of the points announced on September 23.
In her speech on Tuesday, Truss was further downbeat, confirming that UK corporate tax will rise to 25% in April 2023.
He said the move would raise £18 billion a year in tax revenue for the government and act as an “advance” on its economic plan.
“I want to be honest: It’s tough,” Truss said. “But we will weather this storm.”
Finance Minister resigns
Kwasi Kwarteng confirmed his resignation as finance minister in a letter on Tuesday, ahead of Truce’s official announcement.
He was in Washington for meetings of the International Monetary Fund (IMF) but was recalled on Thursday (13).
Kwarteng told BBC News that the tax cut plans had become “a big distraction from a strong package”.
Asked if he should apologize to the British, he said he felt the reactions. “We’re listening to people. Yes, there’s humility and sadness in that. I’m glad for that.”
He added that he had the humility to say, “Look, we made a mistake and we’re not going to continue cutting.”
Truss said the new minister would share his vision for the country and make an announcement on his economic plan by the end of the month.
There is less than 40 days of Truss office
Liz Truss has been prime minister since September 6 and is already facing major turmoil in her government. He was elected leader of the Conservative Party after an internal referendum.
The current prime minister replaces Boris Johnson, who resigned in July after a sex scandal involving close Conservative lawmaker Chris Fincher sparked a crisis.
Before being appointed Prime Minister, Truss was Foreign Secretary in the Johnson administration.
In the internal polls that elected him, he trailed his main rival and former finance minister Rishi Sunak in several rounds of the election, but widened his advantage in the final weeks.
Truss took over, vowing to cut taxes and deregulate the economy in a bid to “get Britain moving”.
Review and discount requests
But Truss’s economic plan spooked financial markets and sparked an outcry among conservative lawmakers, who demanded the prime minister drop parts of his economic plan.
Amid the turmoil at Westminster were calls for Trudeau’s resignation and a general election.
Even after Kvarteng’s resignation announcement and decision to back out of tax cuts, some Conservative lawmakers continue to insist that the prime minister step down in what one senior politician called the BBC “a colossal disaster”.
Liz Truss in a statement (Photo: Reuters)
Rachel Reeves, the economy leader of the opposition Labor Party, said a new government led by her party was “what this country needs”.
Scotland’s first minister, Nicola Sturgeon, called on conservative lawmakers to scrap the truce.
But the British prime minister has ruled out a general election until 2024, and with the government’s majority in parliament, the opposition believes it will be too difficult to force one.
In his speech, the prime minister ruled out the possibility of resigning and said he was “committed to fulfilling what I promised” before abruptly leaving the government.
– This text was published at https://www.bbc.com/portuguese/internacional-63265246
“Music geek. Coffee lover. Devoted food scholar. Web buff. Passionate internet guru.”