The pound plunged after Chancellor Kwasi Kwarteng unveiled a radical programme of £200 billion of tax cuts in Parliament today in a mini-budget which he and Prime Minister Liz Truss hope will spur growth in Britain.
The pound dropped 3% to a 37-year-low against the dollar, hitting $1.109, close to its all-time low of $1.0520.
The package included abolishing a planned rise in corporation tax on businesses to 25% from its current level of 19%.
Income tax will also be cut by 1p to 19p from next April – and the 45p rate of income tax for top earners will be abolished from April 2023.
Stamp duty on home purchases is also being slashed, with the level at which house-buyers begin to pay the tax doubled from £125,000 to £250,000.
Boost for housing market
The cuts in stamp duty are applicable from today, Kwarteng said, “In the current system, there is no stamp duty to pay on the first £125,000 of a property’s value. We are doubling that to £250,000.
“First-time buyers currently pay no stamp duty on the first £300,000. We’re increasing that threshold as well, to £425,000.
“And we’re going to increase the value of the property on which first time buyers can claim relief, from £500,000 to £625,000.”
Bankers’ bonus cap scrapped
The Institute for Fiscal Studies think tank warned that the budget would put Britain’s debt on an ‘unsustainable’ path.
Chancellor Kwasi Kwarteng also scrapped caps on bankers’ bonuses as part of a drive to boost London’s competitiveness as a financial capital.
Prime Minister Liz Truss has promised to ‘really unshackle’ the City of London post-Brexit.
The banker bonus cap was adopted as an EU law in the wake of the financial crisis.
The idea of lifting the cap on bankers’ bonuses would be to lure top global bankers back to the City of London, the Financial Times reported.
Kwarteng told City executives last week, “We need to be decisive and do things differently.”