Chancellor Kwasi Kwarteng promised a “new approach, for a new era” as he promised Britain would finally capitalise on Brexit’s benefits with spectacular tax cuts.
In a Commons statement just two weeks after taking the job, Mr Kwarteng announced a revolutionary package of measures to overhaul the British economy and increase growth to at least 2.5 percent.
The statement, which had been dubbed a “mini-budget” ahead of today, was the most radical fiscal intervention in 50 years.
Speaking in Parliament, Mr Kwarteng announced the following:
- Abolition of stamp duty on homes up to £250,000 and up to £600,000 for first-time buyers
- End of the 45p top rate income tax and a 1p cut in the basic rate to 19p
- Reversal of the hike in national insurance contributions
- Scrapping of planned corporation tax rises next year
According to Treasury estimates, the tax cuts, combined with the energy bills package announced earlier this month, will cost a total of £105 billion by 2026.
Mr Kwarteng pledged that the government would be “bold and unashamed in pursuing growth” and would not be afraid to make “difficult decisions” to achieve it.
The Chancellor’s announcement comes against a bleak economic backdrop.
The Bank of England raised interest rates to 2.25 per cent yesterday, warning that the UK was likely already in a recession. The pound sterling fell to its lowest level against the dollar since 1985, and government bonds experienced their biggest one-day drop since the pandemic began.
Mr Kwarteng told MPs: “For too long in this country, we have indulged in a fight over redistribution. Now, we need to focus on growth, not just how we tax and spend.
“We won’t apologise for managing the economy in a way that increases prosperity and living standards. Our entire focus is on making Britain more globally competitive – not losing out to our competitors abroad.
“The Prime Minister promised we would be a tax-cutting government. Today, we have cut stamp duty, we have allowed businesses to keep more of their own money to invest, innovate, and grow, we have cut income tax and national insurance for millions of workers, and we are securing our place in a fiercely competitive global economy with lower rates of corporation tax and lower rates of personal tax.
“We promised to prioritise growth. We promised a new approach for a new era. We promised to release the enormous potential of this country. Our growth plan has delivered all those promises and more.”