UK: Liz Truss Makes U-Turn On 45% Tax Rate

The British government was forced on Monday into a humiliating U-turn, reversing plans to cut the highest rate of income tax that helped sparked turmoil in the financial market.

The UK Prime Minister Liz Truss, and her finance minister Kwasi Kwarteng, had announced a new "growth plan" on September 23 that would cut taxes and regulations.

The plan will be funded by vast government borrowing to snap the economy out of years of stagnant growth.

But the plan triggered a crisis of confidence in the government and to such an extent that the Bank of England had to intervene with a £65 billion programme to settle the market.

Kwarteng said in a statement: "It is clear that the abolition of the 45 pence tax rate has become a distraction from our overriding mission to tackle the challenges facing our country.

"As a result, I'm announcing we are not proceeding with the abolition of the 45 pence tax rate. We get it, and we have listened."

Liz Truss has also not denied that it would require spending cuts for public services and also refused to commit to increasing welfare benefits in line with inflation.