After Mr Kwarteng abolished the top income tax rate of 45 p.m. and reversed the 1.25 per cent rise in national insurance, independent economists said almost half of the £45 billion cuts would go to the top 5 per cent of earners. His package – which called for additional borrowing of £72.4bn at a time of rising interest rates – rattled markets, with the pound falling to a 37-year low against the dollar and the FTSE100 falling below the 7,000 mark for the first time since in June. And senior Tories have expressed concern, with former Chancellor of the Exchequer John Glenn warning the chancellor of the “irreconcilable realities” of easing fiscal policy as the Bank of England tightens its monetary stance in a bid to contain inflation. The package was announced a day after the Bank warned that the UK may already be in recession and raised interest rates to 2.25%. Implementing what he called a “growth plan” after just 17 days in the Treasury, Mr Kwarteng told the House of Commons that the tax cuts and deregulation promised in Prime Minister Liz Truss’s Tory leadership campaign were essential to “to turn the vicious cycle of stagnation into a virtuous cycle of growth”. He scrapped stamp duty on homes worth up to £250,000, rejected a planned rise in corporation tax from 19p to 25p. and advanced in April 2023 a reduction from 20 to 19 percent in the main income tax rate. Advocates hailed the budget as the biggest tax-cutting package in 50 years. But the Institute for Fiscal Studies said that after tax changes introduced by Mr Kwarteng’s predecessor Rishi Sunak were taken into account, only those earning £155,000 or more would make a total gain during this parliament. Figures from the Ministry of Finance showed that the abolition of the income tax rate of 45 p.m. it will benefit the 629,000 people in the UK who earn over £150,000 by an average of £10,000 a year, with earnings increasing the more they earn. Torsten Bell, chief executive of the Resolution Foundation think tank, said those earning £1m a year would get a £55,000 tax cut next year thanks to the wider package. But there will be no gains for those earning less than £12,750 and those earning £20,000 will see a boost of just £157 from the base rate cut. Just 12 percent of tax revenue goes to the poorest half of households. Kwasi Kwarteng leaves No 11 to deliver his mini budget (Aaron Chown/PA) (PA wire) The Institute for Fiscal Studies said the changes would leave the “vast majority of income taxpayers paying more tax” by 2025/26, when Mr Sunak’s earlier freeze on tax thresholds is taken into account, with only those earning more than 155,000 £. . In a scathing analysis, IFS director Paul Johnson said the plan “seems to be to borrow large sums at increasingly expensive interest rates, put public debt on an unsustainable upward trajectory and hope we get better growth.” . “Mr. Kwarteng has demonstrated that he is willing to play with fiscal sustainability in order to push through these massive tax cuts,” Mr. Johnson said. “Mr. Kwarteng is not just playing on a new strategy, he is betting the house.” The IFS predicted that government borrowing could remain up to £110bn a year even after the massive energy support package – which Mr Kwarteng put at £60bn for the first six months – expires in two years. Future tax increases or spending cuts will be needed to pay down the rising debt, the think tank said. The city panicked in response to the surprise package, in what one analyst described as “the worst day I’ve ever seen”. At its lowest point on Friday afternoon, £1 could buy just $1.0896 – the worst exchange rate for the British since 1985 – and sterling also fell against the weaker euro, while the FTSE 100 at one point to a low of 6,981.5, down 2.5 percent on the day. “By throwing Rishi Sunak’s tax hike plans into the fire, the government is taking a big bet that growth will be sparked, to help the economy grow,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. “But confidence that these unfunded tax cuts are coherent policy for today’s inflation-laden era is going up in smoke.” Labour’s shadow chancellor Rachel Reeves likened the Prime Minister and Mr Kwarteng to “two desperate gamblers in a casino chasing a losing streak”. He said the government had “decided to replace trickle down with leveling up” – accusing Ms Truss of subscribing to “an ideology that says if we just reward those who are already rich, the whole of society will benefit”. Business groups cautiously greeted the chancellor’s mini-budget. But TUC general secretary Frances O’Grady said the government was “keeping wages low and lining the pockets of big business and city bankers”, adding: “This budget is Robin Hood in reverse”. Royal College of Nursing general secretary Pat Cullen said it had given “billions to the bankers and nothing to the nurses” and urged nurses to vote for strike action in an upcoming referendum. Money-saving expert Martin Lewis described the government’s “huge new borrowing” alongside huge tax cuts as “amazing”. He said: “Everything is aimed at growing the economy. I really hope it works. I’m really worried about what will happen if it doesn’t happen.” Former US Treasury Secretary Larry Summers, who served under Bill Clinton and Barack Obama, said the UK was “behaving a bit like an emerging market turning into a sinking market”. Warning that Truss’ “naive, wishful thinking” position could push the pound below parity with the US dollar, he said the UK was pursuing “the worst macroeconomic policy of any major country for a long time”. SNP leader and Scottish First Minister Nicola Sturgeon said the super-rich would be “laughing all the way to the real bank” – accusing the Tories of “moral bankruptcy”. By splitting his package as a “fiscal event” rather than a budget, the chancellor was able to avoid subjecting his figures to the rigorous analysis normally provided by the independent Office for Budget Responsibility. However, contrary to expectations, the Treasury said there would not be a full budget in November for the OBR to assess. Chair of the Treasury Select Committee and Tory MP Mel Stride said the absence of provision for the OBR left a “huge gap” at the heart of the plan. Mr Kwarteng also confirmed he was scrapping the cap on bankers’ bonuses, announced VAT-free shopping for overseas visitors and made new demands for 120,000 part-timers at Universal to seek more and better-paid work or face a cut in their benefits.