On October 17th local time, British Prime Minister Tras apologized for her "wrong" in her economic plan. She said the economic policies it adopted were originally intended to help people solve high energy costs and high taxes, but "going too far and too fast."
↑British Prime Minister Tras
Tras and Chancellor Kwoten, who was fired a few days ago, launched a "mini budget" worth 45 billion pounds on September 23, hoping to pull the stagnant economy out of the quagmire through large-scale financing. However, the radical tax cut plan triggered opposition from lawmakers and a strong market rebound, resulting in a sharp fall in the price of pound sterling exchange rate and government bonds, and the international financial market was turbulent. In addition, Telas's public support rate has also plummeted, and several Conservatives people publicly demanded that he resign. In apology, Tras made it clear that she would not resign and insisted that she would lead the Conservatives to the next general election.
critics point out that Trass' apology is difficult to eliminate the damage already caused. As the new Chancellor further reverses the tax cuts in the "mini budget", can the UK financial market gradually stabilize? In response, some economic analysts warned that policy reversals bring short-term confidence to the market, but it is difficult to make investors "quite" and the possibility of large market fluctuations has not been ruled out.
Tras apologized but would not resign
Critics said that the apology could not make up for the losses
Tras apologized for the "mistake" in her economic plan in an interview with the media on the 17th, but said she would not resign because of this. Although several members of the Conservative Party publicly demanded their resignation, Tras insisted that he would remain “committed to contribute to the country” and continued to lead the Conservative Party to the next general election.
"I do want to take responsibility for this and apologize for the mistakes I made." Trass said, "I want to take action to help the people solve energy bills and high taxes, but we have gone too far and too fast." She added that the "priority" of the British government today is to keep the economy running smoothly.
Tras also said: "I stayed because I was chosen to do things for this country. This is what I am determined to do." She emphasized that the work of Prime Minister for more than a month "is not perfect", but she "corrected the mistake in time." Now she has realized that the policy direction must be changed, and the appointment of Rimi Hunter as the new Chancellor of the Exchequer is one of the remedies. She said the government is still committed to promoting economic growth in the UK today, but will realize this vision in different ways.
Secretary of the Finance Minister Hunter 17 announced on the 317th that it would cancel almost all tax cuts in the "mini budget". In addition, Hunter also said it would significantly reduce the two-year energy subsidy plan announced by Tras. It is reported that the current energy support plan can only last until April next year.
↑Tras and Hunter attended the parliamentary meeting on the 17th
When asked about its impact on economic policies, Tras said she understood it was "very difficult" for families across the UK, but promised to do everything she could to help them. Regarding the cuts in energy support programs, Tras said the government is looking at responses to provide winter energy security for the most vulnerable.
On the same day, British Parliament discussed the economic policy of the Trass government and the appointment and removal of the Secretary of the Exchequer, but Tras himself did not attend the inquiry session and only appeared briefly at the end of the meeting. Regarding Trass' apology, the British Labor Party's shadow Chancellor of the Exchequer James Murray said that the apology will not eliminate the damage caused by the "mini budget", but the people will bear the consequences of the crisis created by the government. Paul Johnson, head of the British think tank Institute for Finance (IFS), also welcomed the reversal of tax measures, but said these were not enough to block gaps in government fiscal plans and eliminate market crashes over the past few weeks.
The UK market continues to turmoil. Whether can calm the crisis, This week is crucial
According to previous reports, on September 23 local time, Trass and Kwoten announced a series of tax cuts in a "mini budget" that is considered the largest tax cuts in the UK in 50 years.The plan reduces the cost of living for residents through tax cuts, reduces the tax burden on enterprises, and stimulates investment demand, hoping to achieve the annual economic growth target of 2.5%.
↑Kwoten (data photo)
But at the same time, many tax cuts actually lack financial support. Analysis pointed out that most of the funds required for tax cuts may be significantly issued by the British government to obtain fiscal funds, which may mean that the UK government's debt ratio will continue to operate at a relatively high level. With high inflation and rapid rise in interest rates, investors expressed concern about the scale of borrowing required by the government for tax cuts and energy subsidies and the sustainability of government debt. It is estimated that Tras' tax cuts will push borrowings for the fiscal year to £190 billion, a far cry from the £99 billion projected by the UK Budget Responsibility Office in March.
The market believes that this series of measures will lead to a sharp depreciation of UK assets, which prompted investors to sell UK government bonds in a massive manner, and government bond prices plummeted, and bond yields soared at the fastest pace ever. The British central bank Bank of England was forced to conduct emergency intervention, and the scale of the bond purchase plan would reach £65 billion to stabilize the market. At the same time, investors began to sell pounds in large quantities to buy the US dollar, causing the pound exchange rate to plummet and fall to historical lows in succession days, and the UK stock market also saw a sharp decline.
statistics show that in the first month of Tras's administration, the total market value of the UK stock and bond markets has evaporated by at least £300 billion. In addition, international credit rating agency Fitch has adjusted its UK rating outlook from "stable" to "negative". This is why the new Chancellor of the Exchequer Hunter emphasized on his first day of taking office that stabilizing the market and restoring the British economic credibility will be his top priority. In order to save expenses, nearly one million people have cancelled streaming services, in addition, the economic stimulus plan proposed by the Tras government may also make the country's high inflation even more severe. The Legatum Institute, the British think tank, pointed out that if people's welfare levels are increased by income rather than current inflation, it will lead to an increase of 450,000 people in the UK from 2023 to 2024, and will also lead to 250,000 people in "deep poverty". They can even be difficult to afford basic necessities such as food, energy, clothing and toiletries.
There is another news that due to the cost of living crisis, nearly 1 million British people have canceled subscriptions to video streaming services so far this year to ensure daily expenses such as energy and food.
As Hunter announced on the 17th to change his tax cut plan, the UK stock market, bond market and foreign exchange market rose collectively. But some economic analysts warned that investors are still in a state of tension, Hunter's new statement has brought about a short-term "stop decline and rebound", but large volatility in the UK market may continue. Some reports pointed out that if the UK has received too much attention recently, it is because it has almost become the center of current global macroeconomic risks, and it is crucial whether the Trass government can calm the crisis to a certain extent this week. Hunter also emphasized again on the 17th that the government’s core responsibility is to make every effort to ensure the stable operation of the economy.
Red Star News Reporter Ding Wen
Editor Ren Zhijiang Editor Guo Yu
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