Embattled UK Prime Minister Liz Truss was forced into a humiliating u-turn on Friday and scrapped her planned cut in corporation tax, hours after she sacked her finance minister Kwasi Kwarteng.
Truss told an extremely brief news conference the increase would raise £18bn a year and be used as a “downpayment on our fiscal plan”. The rise takes place next April and was introduced by former finance minister Rishi Sunak.
She claimed that some of the measures in the ill-received recent mini-budget of unfunded tax cuts, authored by her and Kwarteng, had gone “further and faster” than financial markets had anticipated. The FTSE 100 index was up 1.5% at 6,955.78 and sterling was down 1.2% at $1.11.
“I want to be honest, this is difficult. But we will get through this storm and we will deliver the strong and sustained growth that can transform the prosperity of our country for generations to come,” she told reporters.
“But we recognise because of current market issues, we have to deliver the mission in a different way. That’s why we are absolutely committed to do achieving that stability or what is a very difficult time globally.”
Truss said she was “incredibly sorry” to lose Kwarteng as chancellor and called him a “great friend” who “shares my vision to set this country on the path to growth’.
The prime minister took four questions before leaving the room. She declined to answer questions on her own future given she still believed the measures introduced in the mini-budget were credible.
“The mission remains the same. We do need to raise our country’s economic growth levels,” she said.
Reporting by Frank Prenesti at Sharecast.com