UK Premier Truss reverses plan to scrap corporate tax increase

By Karim El-Bar

LONDON (AA) – Embattled British Prime Minister Liz Truss on Friday announced she would no longer scrap a planned increase in corporate tax, a huge reversal in policy.

She announced the dramatic U-turn in a short press conference at Downing Street,.

"It is clear that parts of our mini-budget went further and faster than markets were expecting. So the way we are delivering our mission right now has to change,” she said.

"We need to act now to reassure the markets of our fiscal discipline. I have therefore decided to keep the increase in corporation tax that was planned by the previous government,” she added.

Earlier in the day, she sacked her Chancellor of the Exchequer Kwasi Kwarteng – the UK Treasury chief – and appointed Jeremy Hunt in his place.

Kwarteng’s mini-budget sparked chaos in financial markets as it contained huge, unfunded tax cuts. It came alongside repeated attacks on established financial institutions such as the Treasury, the Office for Budget Responsibility, and the Bank of England. Alongside a multibillion-pound bailout of the energy sector, markets were spooked.

Truss won the leadership race against former Chancellor Rishi Sunak by pledging to scrap his planned tax increases, including the proposed rise in corporate tax. This makes today’s announcement a huge reversal in policy.

- Key pledge off the table

Speaking today, Truss said that Hunt will now deliver the government’s medium-term fiscal plan on Oct. 31, alongside an independent review by the Office for Budget Responsibility.

"Today I have asked Jeremy hunt to become the new chancellor. He is one of the most experienced and widely respected government ministers and parliamentarians, and he shares my convictions and ambitions for our country,” Truss said.

Truss continued: "I have acted decisively today because my priority is ensuring our country's economic stability. As prime minister I will always act in the national interest.

"This is always my first consideration. I want to be honest. This is difficult. But we will get through this storm and we will deliver the strong and sustained growth that can transform the prosperity of our country for generations to come,” Truss said.

She was asked by reporters, some of them from normally supportive media outlets, how she could continue in her position in the wake of reversing one of her key pledges and in light of how Kwarteng’s budget was a reflection of her own ideas.

Side-stepping these questions, she repeated that she was committed to creating a low-tax, high-growth economy.

The entire press conference, including just a handful of questions, lasted only around 10 minutes before she abruptly left – a notably short outing considering the intensity of the pressure she is under and the scale of the economic turmoil facing the country.