This is on top of the energy relief that Truss already announced which Kwarteng on Friday confirmed could cost £10 billion ($17 billion) per month in the first six months.
He did not state the further estimated costs of the energy bills relief spending, nor the government’s massive tax cuts but defended the UK’s debt levels as the second-lowest debt-to-GDP ratio in the G7.
The UK’s gross debt as a percentage of GDP is currently 99.6 per cent down from the high of 103.8 per cent two years ago, at the height of the first pandemic lockdown.
People on benefits would have to increase their attempts to find a job or risk having their funds reduced, he warned. And in an attempt to bust the strikes that have been crippling Britain’s vital services in the past months, he flagged strike-busting laws that would force pay offers to go to members ballots and a minimum level of services mandated during industrial action.
He said the goal was to achieve 2.5 per cent economic growth.
“We are at the beginning of a new era,” he told the House of Commons.
“The tax system is not simply about raising revenue for public services, vitally important though that is.
“We are securing our place in a fiercely competitive global economy, with lower rates of corporation tax and lower rates of personal tax,” he said.
“In due course, we will publish a medium-term fiscal plan setting out our responsible fiscal approach more fully, including how we plan to reduce debt as a percentage of GDP over the medium term,” he added.
The Labour opposition said the plan was more discredited trickle-down economics.
Paul Johnson from the respected and independent Institute for Fiscal Studies said the government had announced the biggest package of tax cuts in 50 years but “without even a semblance of an effort to make the public finance numbers add up”.
He said the obvious risks of the government’s spending were fuelling inflation, which is currently 9.8 per cent, and the further deterioration in government finances.
“This is a huge economic experiment which carries with it lots of risks, as well as, we hope, the potential upside in terms of economic growth,” Johnson said.
Johnson said the spending spree was at odds with the Bank of England’s recent interest rate rises aimed at curbing inflation.
The markets reacted badly with the quickest spike in interest rates on government borrowing in three decades and the sterling fell against the greenback to below $US1.10, a 37-year low.
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