Kwasi Kwarteng has been accused of delivering a reckless mini-budget for the rich after his £45bn tax cutting package sent the pound crashing to its lowest level against the dollar in 37 years.
In a high-risk strategy designed to revive Britain’s stagnant economy, the new chancellor announced more than £400bn of extra borrowing over the coming years to fund the biggest giveaway since Tony Barber’s ill-fated 1972 budget.
Kwarteng said tax cuts worth more than £55,000 annually to someone earning £1m a year were part of a new direction for the economy and were designed to help boost growth to 2.5% a year. Some Labour MP described them as a “class war'”.
But the Treasury admitted there were no forecasts for the impact of the measures on growth and the gamble received a hostile reception not just from the markets and from opposition politicians, but from economic thinktanks and many Tory MPs, some of whom were aghast.
Paul Johnson, the director of the Institute for Fiscal Studies, said: “Today, the chancellor announced the biggest package of tax cuts in 50 years without even a semblance of an effort to make the public finance numbers add up. Instead, the plan seems to be to borrow large sums at increasingly expensive rates, put government debt on an unsustainable rising path and hope that we get better growth.
“Mr Kwarteng is not just gambling on a new strategy, he is betting the house.”
The shadow chancellor, Rachel Reeves, described it as “casino economics”.
Kwarteng scrapped the 45% rate of income tax paid by those earning more than £150,000 a year, abolished the cap on bankers’ bonuses, reversed the rise in national insurance contributions and brought forward by a year the reduction in the basic rate of income tax from 20% toRead more on theguardian.com