UK Tax Cut Plan Fully Scrapped... Truss Says "Went Too Far, Too Fast" (Summary)

"Not Perfect"...Apologizes but Refuses to Resign
Global Financial Markets React Positively...Major US Stock Markets Rise Together

[Asia Economy Reporter Yujin Cho] The UK government has completely withdrawn the tax cut plan that shook the global financial markets. Prime Minister Liz Truss admitted the failure of the tax cut plan and apologized to the public, but drew the line at calls for her resignation. With her key pledge rendered completely void just over a month into her administration and fierce opposition from her ruling Conservative Party, the risk of Truss's downfall is escalating.

New Chancellor Jeremy Hunt announced in a video statement on the 17th (local time) that most of the large-scale tax cuts introduced by Truss last month would be withdrawn.

Chancellor Hunt stated that the planned 1 percentage point reduction in the current 20% income tax rate, scheduled to take effect in April next year, would be indefinitely frozen, and energy bill support would be shortened from two years to six months. Additionally, plans to reduce dividend tax rates, tourist tax exemptions, and freeze alcohol duties were all withdrawn.

Having already undergone two U-turns, the 'Truss-style' large-scale tax cut plan has been effectively scrapped, with the withdrawn tax cuts amounting to ?32 billion (71%) out of the total ?45 billion (approximately 73 trillion KRW).

In an interview with the BBC following Chancellor Hunt's statement, Prime Minister Truss said about the failure of her flagship economic policy, "I am committed to our vision, but it needs to be delivered in a different way."

She acknowledged, "My actions over the past month have not been perfect, but mistakes have been corrected," and added, "I am still working for the growth of the UK economy, but it will take a long time to achieve."

She further stated, "I accept responsibility for going too far, too fast, and regret the mistakes," adding, "I was committed to economic growth through tax cuts, but now maintaining economic stability is the priority."

Truss emphasized her honesty in reversing the tax cuts and apologizing, while drawing the line at resignation demands. She said, "Admitting mistakes is a mark of an honest politician," and "I have fixed the mistakes, and it would be completely irresponsible not to act in the national interest in the way I have."

However, she said, "I will lead the Conservative Party until the next general election," emphasizing, "Now is the time to focus on the pressing issues at hand, not internal party disputes. We are going through a very difficult time."

Although Truss officially expressed her refusal to resign, skepticism is growing about whether she can hold onto the premiership until the next general election, given that the core pledge of 'growth through tax cuts' has been completely abandoned.

UK media reported that with the Truss tax cut policy being scrapped, Truss has lost the justification to remain in office, and Chancellor Hunt is effectively seen as the prime minister.

Pressure for Truss's resignation continues within the party. The UK Daily Mail cited anonymous sources reporting that over 100 Conservative MPs are ready to send letters of no confidence and plan to oust Truss later this week. The number of Conservative MPs publicly calling for her resignation increased by two on the day, bringing the total to five.

The global financial market welcomed the effective scrapping of the Truss tax cut plan. On the day, the yield on 30-year UK government bonds fell by more than 0.40 percentage points to 4.37%, and the pound rose as much as 2.2% against the dollar.

Major global stock markets, which had been shaken, also rebounded. On the day, the Dow Jones Industrial Average in New York closed at 30,185.82, up 1.86% from the previous session. The S&P 500 and Nasdaq indices rose 2.65% and 3.43%, respectively.

European stock markets also closed higher across the board. The pan-European Stoxx 600 index surged 1.83%, while Germany's DAX and France's CAC 40 indices rose 1.70% and 1.83%, respectively.

This content was produced with the assistance of AI translation services.