Speaking in a series of interviews with BBC radio stations, prime minister Liz Truss has defended the tax cuts outlined in Friday’s mini-Budget.
Labour had been calling for the plans to be scrapped after an adverse reaction from the markets, but the PM insisted that the mini-Budget was the “right plan” to get the economy going.
Truss emphasised her willingness to make the “controversial and difficult decisions” for the good of the economy, after the pound fell in value and borrowing costs began to soar in response to her government’s plans.
Market conditions have prompted the Bank of England to intervene by putting itself forward as a buyer for government bonds.
Despite the volatile reaction, Truss explained that ministers had to take “decisive action” to stimulate growth in the longer term and that she was “prepared to do what it takes to make that happen”.
“Currencies are under pressure around the world,” Truss highlighted.
The PM insisted that the tax burden – which stands at a 70-year high – needed to be alleviated to remove the likelihood of a prolonged recession.
When quizzed on the decision to cut tax for higher earners in the mini-Budget, Truss said it was instead “not fair” to instigate a lengthier economic downturn by keeping tax high.
She added that there was plenty of evidence that the cuts, which include abolishing the 45 per cent tax bracket for earnings of £150,000 per year, would lead to growth.
Truss explained: “If we have higher taxes going into difficult economic times that is likely to lead to a recession. I want people to stay in jobs and earn higher wages.”
She also said that it “simply isn’t true” that the cuts will only benefit higher earners, an issue which critics have taken aim at this week.
“The biggest part of the package that we announced is the support on energy bills, making sure that people across this country are not facing energy bills of more than £2,500 and the businesses can get through this winter,” Truss pointed out.
