Britain’s beleaguered finance minister on Monday announced a dramatic U-turn on a tax cut announced as part of an economic package that has bombed with the markets, electorate and his party.

The change of course by Chancellor of the Exchequer Kwasi Kwarteng, and by Prime Minister Liz Truss, raised questions about their right-wing project less than a month after she succeeded Boris Johnson.

“We get it, and we have listened,” Kwarteng said on Twitter, announcing that he would no longer be scrapping the 45 percent top rate of income tax levied on the highest earners.

Their plan also comprises lifting a cap on bankers’ bonuses and reversing a planned rise in corporation tax as well as a recent hike in national insurance contributions.

At the same time, they are refusing to rule out cuts to spending and benefits in the middle of Britain’s worst cost-of-living crisis in generations.

The perceived unfairness of the package had ignited a political storm, with senior Tory MPs refusing to confirm they would support it in parliament, as well as tanking with voters in opinion polls.

On the markets, Truss and Kwarteng’s intention to pay for the tax cuts with billions more in extra borrowing had sent the pound tumbling and UK government bond yields soaring.

Kwarteng told BBC television that the focus on the top rate of tax had become a “massive distraction”. But asked if he had considered resigning, he said: “Not at all.”

“I’m very pleased that we’ve decided not to proceed with that because it was drowning out the elements of an excellent plan,” he insisted.

Later Monday at the Tory conference in Birmingham, Kwarteng had been due to say: “We must stay the course. I am confident our plan is the right one.”

– ‘Profoundly’ worried –

On Sunday, Truss admitted communication errors in how the plan had been presented on September 23, without conceding the need for any changes.

In a tweet early Monday, she echoed her finance minister’s message that axing the high-earners’ rate had “become a distraction from our mission to get Britain moving”.

“Our focus now is on building a high growth economy that funds world-class public services, boosts wages, and creates opportunities across the country,” she added.

As the Tories began gathering for their four-day gathering in Birmingham, senior party figures were nervous.

Raising borrowing to pay for the £45 billion ($50 billion) in tax cuts was “not Conservative”, former minister Michael Gove told the BBC Sunday, just as Truss left the studio after her own interview.

Gove, ex-prime minister Boris Johnson’s right-hand man in the 2016 Brexit campaign, said he was “profoundly” worried.

Others who, like Gove, backed Rishi Sunak — Truss’s rival in the recent Tory leadership race — had also threatened to vote it down, raising the prospect of a major battle in the House of Commons.

Truss told the BBC she had not discussed axing the high-earners’ tax band with her cabinet, and appeared to distance herself from the move by claiming “it was a decision that the chancellor made”.

That prompted an immediate rebuke from Johnson loyalist Nadine Dorries, who accused the new prime minister of “throwing (Kwarteng) under a bus on the first day of conference” on Sunday.

With the U-turn, the stakes have soared for Truss as she prepares to close the party conference with a keynote speech on Wednesday.

One YouGov survey Friday found 51 percent of Britons think she should resign — and 54 percent want Kwarteng to go.

Several other polls in recent days showed a Labour lead of up to 33 points over the Tories — its biggest since the heyday of former Labour prime minister Tony Blair in the late 1990s.

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UK's under-fire finance minister vows to 'stay the course'

Britain’s beleaguered finance minister is set Monday to vow no retreat on the Conservative government’s plan to pay for controversial tax cuts with billions more in borrowing.

Chancellor of the Exchequer Kwasi Kwarteng will address the ruling Tories’ annual conference a day after Prime Minister Liz Truss admitted communication errors in how the plan had been presented on September 23, without conceding the need for any changes.

“We must stay the course. I am confident our plan is the right one,” Kwarteng will say in his speech to party members gathered in Birmingham, according to the Conservatives.

He will promise “a new economic deal for Britain… backed by an iron-clad commitment to fiscal discipline”.

Truss and Kwarteng have refused to rule out cuts to spending, including for benefit claimants, in the middle of Britain’s worst cost-of-living crisis in generations.

At the same time, their plan comprises cuts in taxes for the richest and lifting a cap on bankers’ bonuses.

With Truss’s administration not even a month old, the right-wing policy blitz has bombed with the electorate, according to polls which show the opposition Labour party opening up a mammoth lead.

Many senior Tories in Birmingham are nervous.

Raising borrowing to pay for the £45 billion ($50 billion) in tax cuts is “not Conservative”, former minister Michael Gove told the BBC Sunday, just as Truss left the studio after her own interview.

Gove, ex-prime minister Boris Johnson’s right-hand man in the 2016 Brexit campaign, said he was “profoundly” worried and refused to rule out voting against the plan in parliament.

Others who, like Gove, backed Rishi Sunak — Truss’s rival in the recent Tory leadership race — have also threatened to vote it down, raising the prospect of a major battle in the House of Commons.

Markets had tanked in response to the plan, and the Bank of England last week staged an emergency intervention to bail out embattled pension funds.

Truss told the BBC she had not discussed axing high-earners’ 45 percent tax rate with her cabinet, and appeared to distance herself from the move by claiming “it was a decision that the chancellor made”.

That prompted an immediate rebuke from Johnson loyalist Nadine Dorries, who accused the new prime minister of “throwing (Kwarteng) under a bus on the first day of conference” on Sunday.

The stakes are rising for Truss as she prepares to close the party conference with a keynote speech on Wednesday.

One YouGov survey Friday found 51 percent of Britons think she should resign — and 54 percent want Kwarteng to go.

Several other polls in recent days showed a Labour lead of up to 33 points over the Tories — its biggest since the heyday of former Labour prime minister Tony Blair in the late 1990s.

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UK cost-of-living protests as Tories defend contentious tax-cut plans

Protesters rallied in London and elsewhere around Britain on Saturday over the cost-of-living crisis, as the ruling Conservatives geared up for their annual conference insisting their debt-fuelled tax-slashing plans were “credible”.

Thousands of demonstrators aligned with various causes and organisations — including environmentalists Extinction Rebellion and Just Stop Oil as well as inflation-focused group “Don’t Pay UK” — blocked roads and bridges in London.

People chanting “can’t pay, won’t pay” burned mock energy statements, as huge price increases to electricity and gas bills came into effect at midnight Friday.

The government has capped the rise at roughly 27 percent for the next two years — meaning the average household will pay annual bills of around £2,500 ($2,792) — following several previous dramatic spikes over the last year.

But that could still prove unaffordable for many, and comes amid decades-high inflation that has pushed up the cost of petrol, food and numerous other everyday essentials.

“Enough is enough. It’s time to funnel our collective rage into something active and productive,” Lily Holder, 29, from southeast London, said as she joined the protests.

“The people want and desperately need change — and they need it soon.”

Demonstrators demanding more action to tackle the climate emergency also attended, with the “Just Stop Oil” group demanding the UK government stop all new oil and gas extraction.

– ‘Iron grip’ –

Meanwhile, protesters turned out in Birmingam to rally against the handling of the situation by the ruling Tories, who kick off their annual conference in the central English city on Sunday.

Following a week of turmoil on financial markets prompted by their September 23 mini-budget, under-fire Prime Minister Liz Truss and her Chancellor of the Exchequer Kwasi Kwarteng arrive on the defensive over the economic package.

The tax-slashing plans, which will dramatically increase government borrowing, went further than many expected, abolishing the top rate of income tax and lifting a cap on bankers’ bonuses.

It prompted the pound to drop to its lowest ever level against the dollar.

The turmoil forced the Bank of England to make an emergency intervention to stabilise the situation, amid fears of a collapse in UK pension funds.

After nearly a week of silence, Truss faced a gruelling round of BBC radio and regional television interviews Thursday, before penning an article in The Sun published overnight.

In it, she conceded for the first time that the plans had prompted “short-term disruption”, but vowed to press on with them and handle public money with “an iron grip”.

Meanwhile, in his own piece in the Daily Telegraph Kwarteng said his ministry will next month unveil a “medium-term fiscal plan” that will set out a path to reducing borrowing, alongside “new fiscal rules and a commitment to spending discipline”.

He noted a full forecast from the country’s fiscal watchdog, the Office for Budget Responsibility (OBR), would also accompany the plan on November 23.

The lack of an OBR forecast has been cited as one of the reasons for the market tumult that followed the September 23 release of the mini-budget, which cut taxes for the wealthiest amid a cost-of-living crisis.

– ‘Something different’ –

Opposition politicians, independent analysts and even some Tory lawmakers have assailed the plans as reckless and counter-productive.

But Kwarteng has insisted the package is essential to return the UK, which is tipped to fall into recession imminently, to economic growth.

“Not all the measures we announced last week will be universally popular. But we had to do something different. We had no other choice,” he reiterated in the Telegraph.

However, Britons and economic analysts appear unconvinced.

A poll Friday found just over half think both Truss and Kwarteng should resign — less than four weeks after they took office.

Support for the mini-budget has been in the single digits in some surveys.

Also on Friday, the S&P ratings agency said it had revised its outlook for the UK from “stable” to “negative” following the fallout from the mini-budget.

It cited the risk that “the UK’s economic growth turns out weaker due to further deterioration of the economic environment, or if the government’s borrowing costs increase more than expected”.

It comes days after rival ratings agency Moody’s warned that Kwarteng’s fiscal strategy was “credit negative” and could “permanently weaken the UK’s debt affordability”.

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Half of Brits think new UK PM Truss should quit: poll

New UK Prime Minister Liz Truss’s early missteps have prompted turmoil in her personal poll ratings, as well as financial markets, with a survey Friday finding half of Britons think she should resign.

Less than four weeks into the top job, and a week after the disastrous unveiling of a mini-budget that cut taxes for the wealthiest amid a cost-of-living crisis, 51 percent of people polled by YouGov said she should quit.

It represents a damning verdict on the latest Conservative leader, who succeeded Boris Johnson on September 6 after he resigned following a slew of scandals.

Truss beat former finance minister Rishi Sunak in a summer-long leadership contest, promising immediate tax cuts and a focus on driving economic growth amid predictions of recession in Britain.

But when new Chancellor of the Exchequer Kwasi Kwarteng unveiled their tax-slashing plans last week, they went further than many were expecting, abolishing the top rate of income tax and lifting a cap on bankers’ bonuses.

The controversial economic package, which will dramatically increase government borrowing, also unusually lacked an accompanying cost analysis forecast from the country’s fiscal watchdog, the Office of Budget Responsibility.

It led to immediate turmoil in the financial markets, with the pound dropping to its lowest ever level against the dollar.

Days later, the Bank of England was forced to make an emergency intervention to stabilise the situation, amid fears of a collapse in UK pension funds.

Opposition politicians, independent analysts and even some Tory lawmakers have assailed the plans as reckless and counter-productive.

Instead of defending the proposals on the airwaves, Truss remained silent for nearly a week, before emerging Thursday to do a mammoth round of BBC radio and regional television interviews.

Her belated attempt to defend the plans were widely panned as disastrous, as the Tory leader struggled to justify aspects of the package and the clear fallout from them.

The YouGov poll of 4,918 adults, conducted on Friday following the interviews, found just a quarter of the public thought she should remain in Downing Street.

More than half also thought Kwarteng should go.

Just three percent said the mini-budget had the right ideas and was communicated well.

Meanwhile another poll Friday by Ipsos found half of people now expect Labour leader Keir Starmer to become prime minister, up from 38 percent in May.

Only 18 percent said Truss was doing a good job in that survey.

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BoE intervenes as IMF criticises UK budget

The Bank of England stepped in Wednesday to shore up market confidence after the International Monetary Fund criticised Britain’s inflation-fighting budget.

In a surprise move, the BoE announced it was temporarily buying up long-dated UK government bonds “to restore orderly market conditions”.

The pound promptly slumped 1.7 percent to $1.0552 before clawing back ground.

There was respite elsewhere, with the UK government’s 30-year bond yield retreating to 4.44 percent, having hit a 1998 peak at 5.14 percent.

The BoE intervention followed criticism Tuesday from the IMF, which argued that Britain’s budget could increase inequality and worsen inflation.

Credit ratings agency Moody’s also waded in overnight with a warning about soaring debt.

– ‘Finally intervenes’ –

“So, the Bank of England finally intervenes after coming under so much pressure to act,” said City Index analyst Fawad Razaqzada.

“The BoE’s intervention is an attempt to soothe investor nerves after they were spooked by last week’s mini-budget.”

Finance minister Kwasi Kwarteng’s big tax cuts and energy price freeze, aimed at boosting the UK’s recession-threatened economy, appeared to have had the opposite effect as traders warn of ballooning debt to pay for the incentives.

Following last Friday’s budget, UK bond yields soared and the pound hit a record low at $1.0350, perilously close to parity.

Critics added that Kwarteng’s measures would benefit the rich more than the poorest, as millions of Britons suffer from a cost-of-living crisis.

“We have acted at speed to protect households and businesses through this winter and the next, following the unprecedented energy price rise,” the Treasury said after the IMF criticism.

“We are focused on growing the economy to raise living standards for everyone,” it added, blaming sky-high oil, gas and electricity prices on Russia’s invasion of Ukraine.

– IMF advice –

In a highly unusual intervention, the IMF late Tuesday said it was “closely monitoring” developments and urged the government in London led by new Prime Minister Liz Truss to change tack.

The Fund added: “We understand that the sizable fiscal package announced aims at helping families and businesses deal with the energy shock and at boosting growth via tax cuts and supply measures.

“However, given elevated inflation pressures in many countries… we do not recommend large and untargeted fiscal packages at this juncture.”

The IMF said the “UK measures will likely increase inequality” and stressed the importance of fiscal policy not working “at cross purposes to monetary policy”.

Analysts warned that Britain’s controversial measures could force the BoE to hike interest rates far higher than forecast.

“Expectations that there will be a super-size interest rate hike coming from the Bank of England to try and counter the government splurge on tax cuts and spending have increased,” Hargreaves Lansdown analyst Susannah Streeter noted Wednesday.

Many central banks, including the BoE, are aggressively hiking interest rates in a bid to cool decades-high inflation.

The BoE on Wednesday warned there was a “material risk to UK financial stability” should current market conditions continue.

Purchases “will be carried out on whatever scale is necessary”, added the bank headed by governor Andrew Bailey.

– Tax cuts –

In his budget, Chancellor of the Exchequer Kwarteng cut the highest rate of income tax and scrapped a cap on banker bonuses.

He also, however, announced a plan to lower income tax for all workers.

Conservative party head Truss appointed Kwarteng to replace Rishi Sunak, who reached the final two in the race to be prime minister.

Sunak had hit out strongly at Truss’s promise of tax cuts, arguing that the UK priority was to first bring down the nation’s inflation rate that stands at a near 40-year high of 9.9 percent.

Moody’s called Britain’s new fiscal policy regime “credit negative”, adding that a sustained confidence shock could “permanently” weaken its debt affordability.

Kwarteng has said he would wait until November 23 to outline plans on controlling government debt.

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