In a move that is expected to ignite the upcoming political uprising over her economic ambitions, British Prime Minister Liz Truss has refused to rule out reducing benefit payments by less than the rate of inflation in order to help finance her tax-cutting growth plan.
Since they did not specify how they would pay for the more than 40 billion pounds ($46 billion) in tax cuts announced last month, Truss and her finance minister Kwasi Kwarteng are scrambling to explain how they will do so. This has caused chaos in the financial markets.
To please Conservative Party legislators who viewed the government’s plan to eliminate the highest rate of income tax as a gift to the wealthy during a time of cost-of-living crisis, the government has already been forced to withdraw the proposal.
Late on Monday, Kwarteng also concurred to publish the government’s expanded debt-reduction strategy along with estimates of economic growth and public finances. Truss stated that the plan might place limitations on welfare benefits.
In response to a question on whether benefits would increase to keep up with inflation, which was 9.9% in August, Truss told the BBC: ‘We are going to have to make judgments about how we bring debt as a proportion of GDP back down in the medium term.’
‘We must consider these concerns holistically. We must manage our money responsibly.’
Truss, who was chosen as prime minister by party members rather than the general public, wants to shake the economy out of a decade of slow growth with a plan to cut taxes and regulations a la the 1980s, much of which will be financed by massive government borrowing.
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