Sterling jumps as UK government turns to top tax rate cut

London – British pound It rose sharply on Monday morning as the British government reversed its plan for a higher rate of income tax.

“It is clear that the abolition of the 45 pence tax rate has become a distraction from our primary task of addressing the challenges facing our economy,” Finance Minister Kwasi Quarting said in a statement.

“As a result, I’m announcing that we’re not going to go ahead with eliminating the 45p tax rate. We’ve got it, and we’ve listened.”

Sterling pound was 0.8% higher vs. dollar At one point on Monday morning, it fell to $1.1212 by 7:30 AM London time after the official announcement. Bring it back to the level it was before Kwarteng unveils batch of tax cuts On September 23.

The cuts were poorly received by financial markets, and the abolition of the 45% tax paid on income over 150,000 pounds ($166,770) was seen as politically damaging as Britons grapple with the cost of living crisis.

with the ruling Conservative Party sink In the polls since the so-called “mini-budget” and that has been Criticize By the International Monetary Fund in a rare move, many politicians spoke out against the proposals.

Grant Shapps, the former transport minister, said in an interview with the BBC on Monday morning that the rollback of the tax cut at the highest rate was a “reasonable response” because the tax cut was “for people who need it less… which was unsustainable”.

It represents a major and humiliating turnaround for new Prime Minister Liz Truss, who has recently been insisting that she is “fully committed” to cutting.

She also revealed that the decision was made by Kwarteng and not made public to her entire Cabinet. The Treasury said the scheme would have provided an average of £10,000 in annual interest to the country’s largest 660,000 people.