Former UK Prime Minister Liz Truss’s suicidal mini-budget which eventually paved the way for her downfall may have cost the country’s economy a staggering $35 billion (£30 billion), according to a new report.
A UK-based independent think tank named Resolution Foundation crunched the numbers and arrived at the $35 billion figure. It added that the fiscal hole could have been far higher if new Chancellor Jeremy Hunt had not taken a swift u-turn on several of her key financial policies.
The think thank said during the tumultuous seven-week reign of Truss, nearly $23 billion (£20 billion) was wasted away on unfunded cuts to national insurance and stamp duty. Additionally, $11 billion (£10 billion)
As reported by WION, the UK government under Truss was forced to abandon its plan to abolish the 45 per cent top rate of income tax.
The humiliating U-turn was necessitated days after Truss announced it in her mini-budget alongside then Chancellor Kwasi Kwarteng. The latter was unceremoniously sacked by Truss after the party, opposition and the public openly criticised her plans.
WATCH | UK economy | Liz Truss’ U-Turn on 45% tax cut for the rich
Still reeling from the effects of ‘Trussonomics’, Jeremy Hunt is expected to unveil a new taxation scheme, according to which, nearly 246,000 people in Britain will be forced to pay the top rate of tax.
Many expect that the new prime minister and the chancellor will reportedly reduce the 45p income tax rate threshold from £150,000 ($177,600) to £125,000 ($148,000). This is expected to be announced during the Autumn Statement, the British media reported.
Read more: New plan by UK PM Sunak and Jeremy Hunt will make over 200,000 Britishers pay tax,”
With this new plan, the government aims to collect approximately £1.3 billion ($14.9 million) annually, as it makes efforts to close a fiscal gap estimated at £60 billion through increasing taxes and reducing spending.
Truss and her plan looked alright on paper but the government did not have the money to fund the tax cuts. It started a domino effect which ended with her rather tame resignation.
Prime Minister Sunak, sympathetic to Truss said that he is open to tax cuts in the long run, but ruled out short-term tax cuts.
(With inputs from agencies)
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