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Fall of Truss image - Coggle Diagram
Fall of Truss
Contents of mini budget in September
Abolishing the 45% tax rate
lowering income tax from 20% to 19%
freezing rates on alcohol duty
scrap VAT for non UK visitors
reversing 1.25% rise in national insurance
no stamp duty on first 2500 00 on buying a house
no stamp duty on first 425 000 for first time buyers
What has been 'U-turned' out of the mini budget and why?
Scrapped Measures
Corporation Tax: Cancelling rise from 19% to 25% :red_cross:
Income Tax: Removal of 45% top rate for high earners :red_cross:
Income Tax: Cutting basic rate 1p to 19p :red_cross:
Alcohol Duty: Freezing rates :red_cross:
VAT: Tax-free shopping for non UK visitors :red_cross:
Why did markets/ Bank of England IMF get spooked?
The Bank of England has warned of a "material risk" to financial stability as it made a fresh emergency move to try to calm investors.
They would buy more government bonds to try to stabilise their price and prevent a sell-off that could put some pension funds at risk of collapse.
Third time the Bank has had to step in since the government's mini-budget sparked alarm among investors.
The Bank was forced to intervene after government borrowing costs rose sharply despite actions it and the Treasury had taken to calm investors on Monday. Those measures included:
Chancellor Kwasi Kwarteng saying that he would bring forward his economic plan where he will spell out how he plans to pay for the tax cuts and provide an independent forecast on the UK economy's prospects.
And the Bank of England saying it was prepared to double the amount of bonds it was buying to help support their price, while reiterating its support would end on Friday.
Why having 4 chancellors in 4 months is bad
Instability
Investors worry as markets react e.g. bond market and stock market.
Shows lack of trust
Frequent changes in views of approaches to resolve economy. - No one plan is being stuck to in long term.
