Just ten days after making radical tax changes in an effort to boost the UK economy, Liz Truss’s government have been forced into an embarrassing U-turn.
Having faced a backlash from the markets, PMs and the media, Kwasi Kwarteng tweeted; “We get it, and we have listened,” as they issued a statement detailing a roll back on the abolishment of the top rate of UK tax.
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GBP/USD spiked in an immediate reaction as investors started to remove bets against the pound.
“With the Conservative conference this week, and the Downing Street chairs barely warm, the new Government has chosen red faces over continuing pain,” said Alice Guy, Personal Finance Editor, interactive investor.
“The initial surprise tax reduction spooked the market and confidence is still shaken – lesson number one is the need to be open and transparent about the numbers behind the plans to stabilise the UK economy.”
While the short term market reaction was one of relief, the Liz Truss government is limping through through its first weeks in charge and is in a precarious position.