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British PM Liz Truss apologises for economic mistakes

British Prime Minister Liz Truss (Photo: IANS)

British Prime Minister Liz Truss apologised for the economic mistakes made in the last one month that scared the markets and earned the country a rebuke from the International Monetary Fund (IMF).

In an interview to the BBC, Truss, who became the Prime Minister barely 40 days back, said she accepts the responsibility for going “too far too fast” with economic reforms that damaged investor confidence and almost shook her leadership.

But she was clear that she was leading her Conservative Party to elections two years later, ending speculation that she would be on her way out after the disastrous decisions taken by the Chancellor of Exchequer Kwasi Kwarteng.

Under severe criticism for the mini budget, Kwarteng was forced to resign from his position after being recalled from the annual meetings of the World Bank from Washington last week. The decision to completely do away with the 45 per cent income tax bracket in a bid to reduce the taxes of the super rich earned much notoriety for Truss and Kwarteng.

On September 23 the government had introduced a 45-billion-pound tax cut to boost economic growth. But it threw financial markets into a spin as the Pound collapsed and government borrowing costs rose sharply. Investors said that the tax-cutting measures would increase public borrowing and push inflation.

The new Chancellor, Jeremy Hunt rolled back all of the debt-fuelled tax cuts to avert fresh market chaos. Hunt is known to be close to former Chancellor Rishi Sunak and has endorsed Sunak’s ideas for reviving the UK’s battered economy.

Soon after taking over as the fourth Chancellor this year, Hunt told parliament: “The prime minister and I agreed yesterday to reverse almost all the tax measures announced in the growth plan three weeks ago”.

He also scaled back the vast energy support scheme and scrapped plans to axe the lowest rate of income tax.

The challenge before both Hunt and Truss now will be to tackle the rising cost of energy as well as the worsening cost-of-living crisis.