Prime Minister Liz Truss dropped a plan to cut taxes for the highest earners just 10 days after announcing it, in a bid to fend off a mounting rebellion from Members of Parliament in her own Conservative Party.
Chancellor of the Exchequer Kwasi Kwarteng announced the decision in a tweet early Monday, saying “we get it, and we have listened.” In a statement posted with his tweet, he said the decision to scrap the 45% rate of income tax had become a “distraction.”
In making the U-turn, Truss and Kwarteng will be hoping to draw a line under days of market turmoil that followed Kwarteng’s Sept. 23 fiscal package. Even so, it’s a major reversal for a government that’s been in office for just a month, especially after the premier and chancellor had spent days defending the measures. Truss said on Sunday that she was committed to the package of measures.
The pound erased losses to trade 0.8% higher against the dollar.