Embattled British Prime Minister Liz Truss on Friday said the government has reversed her policy to scrap the planned rise in corporation tax from 19 percent to 25 percent.

"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 said.

"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," Truss said.

Truss said she is "absolutely determined" to deliver an economic growth plan.

Also Read: Fears of watered-down India-UK free trade pact amid visa row

“This will raise £18 billion per year. It will act as a downpayment on our full medium-term fiscal plan which will be accompanied by a forecast from the independent OBR (Office for Budget Responsibility). We will do whatever is necessary to ensure the debt is falling as a share of the economy in the medium term," she added.

This comes after Truss sacked her Chancellor, Kwasi Kwarteng, in an effort to stem the economic turmoil unleashed by his mini-budget at the end of last month.

The estimated GBP 45 billion worth of tax cuts without a detailed funding plan to back it up were seen as disastrous for the UK economy at a time when inflation has already been soaring.

Also Read: Jeremy Hunt is fourth UK finance minister in as many months after Kwasi Kwarteng ouster

Truss and Kwarteng, who have been close friends for years, had insisted that the turbulence in the UK economy was part of a global problem exacerbated by the Russia-Ukraine conflict-induced energy crisis and post-pandemic recovery.

Earlier, the finance minister cut short his visit to the US for an International Monetary Fund (IMF) meeting in Washington to fly back for a meeting with his boss.

It had triggered speculation over his job and possible U-turns on the tax cuts he had tabled in Parliament, which had resulted in the pound plummeting against the dollar and the Bank of England stepping in to buy the country's long-term bonds to shore up the pension funds.

First Published:Oct 14, 2022 8:00 PM IST