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Chancellor Kwarteng unveils new economic plan for UK

Chancellor Kwarteng unveils new economic plan for UK

On September 26, UK Chancellor of the Exchequer Kwasi Kwarteng announced a new stimulus plan to support the economy. The presented fiscal plan sets out a new approach to the UK economy based on three main priorities: reforming the supply side of the economy, maintaining a responsible approach to public finance, and cutting taxes to boost economic growth. Kwarteng stressed that the government would first take measures to support households and only then businesses and the public sector. What is more, UK energy companies may also count on help from the government and the Bank of England amid an unstable energy market. The total cost of the energy package for the six months coming is expected to be around £60 billion. The plan aims to bring inflation down by 5%. The minister is sure that this will help reduce the cost of servicing government debt. The next step will be focused on cutting taxes. The corporate tax rate will not be raised to 25% as was planned earlier. Kwarteng believes that this way, the UK will become the country with the lowest corporate tax in the G20. According to estimates, this measure will bring almost £19 billion a year back into the UK economy. Furthermore, there have been negotiations with local authorities to establish special low-tax investment zones where businesses will get tax cuts. What is more, the additional rate of income tax will be abolished from April 2023. The Chancellor of the Exchequer announced that the basic rate of income tax will be cut from 20% to 19%. The highest 45% tax rate will be replaced with a single higher rate of 40% for those who earn over £150,000 a year.

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