After facing widespread criticism for failing to provide details of a billion-pound stimulus package and tax cuts announced last month, Britain's Treasury chief said Monday he will bring forward the release of the government's full fiscal statement.
Kwasi Kwarteng was scheduled to release details of his fiscal strategy on November 23, two months after announcing a plan that included 45 billion pounds ($50 billion) in tax cuts to be paid for with government borrowing. This plan triggered days of turmoil in global financial markets, sending the British pound to record lows against the US dollar and forcing the Bank of England to intervene to support the bond market.
Many welcomed the U-turn, but Kwarteng and Prime Minister Liz Truss' Conservative government face deep skepticism because they have stated that they will stick to the government's other tax policies, such as lowering the basic rate of income tax and reversing a corporation tax hike planned by the previous Conservative government.
Former Cabinet minister Grant Shapps called the decision to publish the full fiscal statement "a belated but prudent move, given the urgent need to show markets the most transparent view of the UK economy."
Mel Stride, the chair of Parliament's treasury committee, welcomed the decision and predicted that interest rates would rise less than expected. The government's unfunded tax-cut plan has fueled widespread fear that the Bank of England will soon raise interest rates significantly to combat inflation.
The central bank has gradually increased the benchmark interest rate in recent months as inflation has risen, but many economists believe the bank will announce a larger increase in November.
The government insists that its plan will boost economic growth, but many critics argue that tax cuts will likely mean less money for public spending such as social services, leaving the poorest people worse off in the midst of the UK's worst cost-of-living crisis in decades.
The market turmoil has also had an immediate negative impact on prospective home buyers and thousands of people looking to remortgage their homes, as lenders have withdrawn scores of mortgage deals due to the uncertainty. Mortgage interest rates reached their highest levels in more than a decade last week.
Also on Monday, the Bank of England announced steps to ensure the "orderly termination" of its emergency bond-buying program, which it launched late last month to calm markets and avoid "widespread financial instability" caused by Kwarteng's stimulus package.
The bank promised to buy 65 billion pounds of government bonds just days after the Conservative government's economic plan sparked market turmoil, threatening the viability of some pension funds.
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