Prime Minister Liz Truss is now 18 days into her premiership and in her short tenure as leader of the nation has dealt with the death of the longest reigning monarch and the escalation of threats from Russia.
But perhaps her biggest challenge is the current cost of living crisis, with increasing inflation and a continued energy crisis.
This morning the new Chancellor of the Exchequer Kwasi Kwarteng will face an early test in his new role as he rolls out a mini-budget to help ease the financial crisis the UK is facing.
Coming a day after the Bank of England confirmed the UK is officially in a recession, some of the government’s plans have already been confirmed.
But with Kwarteng promising a “new era for Britain”, what could his package of measures be to “turn the vicious cycle of stagnation into a virtuous cycle of growth”?
What has already been confirmed in the mini-budget?
National Insurance reversal
The reversal of a planned increase in National Insurance has already been confirmed by Kwarteng ahead of this morning’s mini budget.
The hike, announced back in April, was set to raise National Insurance tax by 1.25% but the scrapping of this hike was one of Liz Truss’ campaign promises during her campaign to become the new Prime Minister.
Cutting of green levies
The scrapping of green levies was first announced while Kwasi Kwarteng was Business Secretary.
In an official statement from the Department for Business, Energy & Industrial Strategy, they stated that “the UK government is consulting on the option to increase the level of exemption for certain environmental and policy costs from 85% of costs up to 100%.”
“The proposal would help around 300 businesses supporting 60,000 jobs in the UK’s industrial heartlands. “
“Looking at ways to reduce the cost of doing business for key industries would help secure the future of domestic manufacturing and maintain a competitive business environment in the UK, ensuring economic growth and protecting thousands of jobs across the country.”
What is expected to be announced from the mini-budget?
Cutting of stamp duty
In an effort to stimulate growth there have been reports that one of the biggest measures Kwasi Kwarteng may announce this morning is the scrapping on stamp duty for new homeowners.
“Any reduction in the levy will probably bolster home prices, which soared during the pandemic when the tax was suspended for many buyers in order to stimulate demand” Bloomberg reported.
VAT and income tax
There are considerations by Liz Truss’ government that VAT may be slashed from 20% to 15%, and income tax being lowered by 1p.
Right now, people in England, Wales and Northern Ireland pay 20% on any annual earning between £12,571 to £50,270
Scrapping of corporate tax hike
Sky News has reported that Kwasi Kwarteng is set to follow through with the axing of a planned increase in corporation tax from 19% to 25% and putting an end to the caps on bankers’ bonuses.
Such measures led to Liz Truss admitting that she had no problems being an “unpopular” Prime Minister but argued why hard working people should be penalised.
Low tax zones
The creation of a network of low-tax, low-regulation investment zones have been discussed by Lizz Truss during her campaign trail.
The West Midlands, the Thames estuary, the Tees Valley, West Yorkshire and Norfolk are among the places discussed as low tax zones.
In each area there will be a central region, where regulations and planning rules will be eased to encourage industrial, commercial and residential development.