Tax cuts: British government back-pedals

Fierce protests and turmoil on the financial markets have forced the British government to back down on its recently announced tax plans. Several Conservative MPs had threatened to vote against a cut to the highest rate of income tax, prompting Chancellor of the Exchequer Kwasi Kwarteng to withdraw the plan. "We got it, we listened," he announced. Commentators are divided on the issue.

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Kleine Zeitung (AT) /

Prime minister playing Trussian roulette

Truss played with fire and got burnt, the Kleine Zeitung comments:

“A humiliating U-turn that does not inspire confidence in the competence of the new government. Tax relief on credit is 'Trussian roulette'. Above all, it is a mockery of those sections of the population that are on the brink financially to relieve the burden on those with the highest incomes: the rest of the country is in the midst of the worst economic crisis in decades and no longer knows how to cope with the exorbitant cost of living - above all energy prices.”

The Sun (GB) /

At last proper Tory politics again

Criticism of the government's financial plans is unjustified, writes The Sun:

“Truss, with her commendable pro-growth strategy, is telling Britain some hard truths. We are getting poorer. ... We must increase productivity, cut taxes from their 70-year high and ease regulation. ... This should not be remotely controversial. But Britain is so used to complacent socialism-light under Labour AND the Tories - especially now with two massive state bailouts - that nearly 40 per cent in a new survey consider tax-cutting Conservatives 'extreme'. ... If the Tories aren't for lower taxes, a leaner state and a richer Britain for all, what are they for?”

The Daily Telegraph (GB) /

U-turn a wrong turn

The Daily Telegraph says the government's U-turn is a mistake:

“The arguments in favour of reducing the top rate to a level that Labour was happy with throughout the entirety of its last term in office were strong, but the delivery of the cut was arguably mishandled and it is now impossible to carry through. It was supposed to be symbolic of a new era and indicative of the Government's commitment to a growth strategy. ... Doing nothing in the face of a global economic slowdown was not an option, Mr Kwarteng said, and too many decisions about deregulation ... had been put off for far too long. Again, he is right which is why the U-turn on the 45p tax cut is such a setback. It was abandoned not because the rationale was wrong but because the parliamentary arithmetic was against it.”

Financial Times (GB) /

Prized reputation is gone

The damage is irreparable for the Tories, the Financial Times believes:

“In perhaps the first sound political judgment of the entire affair, the leadership concluded that is was better to kill the issue now rather than have it undermine everything else they are trying to achieve. The hope will be that having drawn blood, restive MPs will now get behind the government. But the bigger question is whether the damage can be undone. The scale of this error is hard to overstate. The prized reputation for competence is gone.”

Corriere della Sera (IT) /

Truss's rivals smell blood

Things couldn't have got off to a worse start for Liz Truss, Corriere della Sera observes in a mocking tone:

“The opinion polls show an unstoppable rise of the Labour Party, which can now present itself as the party of economic reliability. The prime minister has opted for a partial retreat to catch her breath and try to convince her party and the country that her strategy is the right one for the long term. But it is by no means certain that she has much time left: Liz Truss wanted to present herself as the new Margaret Thatcher, but instead she is looking more and more like Theresa May, who lost her authority after a series of mistakes and setbacks and was finally ignominiously shown the door. The Conservatives already smell blood.”

Aftonbladet (SE) /

A warning to Swedish conservatives

For Aftonbladet the British government's U-turn should also serve as a warning to the Swedish conservative politician Ulf Kristersson, who is currently trying to form a government in Stockholm:

“Kristersson's plans are perhaps not quite as spectacular as those of his British colleague. He advocated comprehensive tax cuts in the election campaign, at a time when society needs all the resources it can muster to avoid sheer misery among the most vulnerable. Moreover, this policy would work against the Riksbank's attempts to bring down inflation and raise interest rates. Kristersson has a chance to avoid the fiasco that Liz Truss suffered. He can withdraw the proposals for tax cuts in the ongoing government negotiations. The only question is whether the conservatives' compulsive behaviour will allow it.”