British govt forced into U-turn on tax cut for top earners

Focus now on building high growth economy, says Truss

BIRMINGHAM - British Prime Minister Elizabeth Truss and Finance Minister Kwasi Kwarteng were forced into a humiliating U-turn on Monday after less than a month in power, walking back a contentious tax cut that was part of an economic package that has bombed with the markets, the electorate and their party.

Speaking at a Conservative Party conference on Monday after backtracking on the plan to scrap the 45 per cent rate of income tax in order to head off the growing threat of a party rebellion, Mr Kwarteng vowed: "No more distractions...

We have a plan and we need to get on with it." The policy reversal - just 10 days after the measure was first announced is a major embarrassment for Mr Kwarteng and Ms Truss.

The abolition of the top rate was a signature part of their "plan for growth", as they unveiled the biggest set of unfunded tax cuts in half a century in a dramatic fiscal statement on Sept 23.

The package sparked a market rout, sending the pound to an alltime low against the US dollar and forcing the Bank of England into a dramatic intervention to stave off a gilt market crash.