The British Prime Minister, the Conservative Liz Truss, has assured this Wednesday that she will not cut public spending in order to wipe out the debt that her controversial growth plan based on large tax cuts will generate. In her first parliamentary appearance after the presentation on September 23 of her fiscal plan, which sowed chaos in the financial markets, Truss has told the leader of the Labor Party, Keir Starmer, that she remains “absolutely committed” to her promise made during the internal elections by the conservative leadership not to cut state investment.
The desire to reduce taxes makes Liz Truss sink the British economy in a few days
The head of the Government has maintained that she will achieve the objective of reducing “in the medium term” the net debt in relation to the gross domestic product (GDP) simply by making sure “that public money is well spent”.
Several tax experts have warned that he will have to cancel or postpone some of his tax cuts, which leave a hole of 43,000 million pounds (almost 50,000 million euros), or cut public spending if he wants to balance state finances. When the fiscal plan, which froze corporate income tax and reduced the top bracket of income tax from 45% to 40% — a measure now eliminated — was initially announced, the pound sank to its all-time low against the dollar. and the risk premium on sovereign debt skyrocketed.
Temporary cap on renewable energy prices
The British Government has announced that in 2023 it will temporarily limit the benefits of renewable and nuclear energy generating companies that currently benefit from inflated prices in the wholesale market because they are linked to rising gas prices globally.
The Conservative Executive includes the measure, which has been criticized by the sector, in its energy price bill, which begins its parliamentary process with several aids to citizens and companies to combat the energy crisis.
The so-called “Cost plus income limit” is introduced to prevent renewable electricity generators, such as solar or wind, and nuclear, whose wholesale prices have risen as they are linked to gas, from profiting disproportionately, explains the Government in a release. Other companies of more recent formation that operate on the basis of other types of contracts will not be affected, he points out.
The Conservative Executive explains that in the UK market “wholesale electricity prices are established by the most expensive form of generation, which is generation through burning gas, which is why they have risen significantly” since the Russian invasion of Ukraine.
In this way -he adds-, “companies that generate electricity with low carbon emissions (not by burning gas) are benefiting from abnormally high prices”, which harms consumers, who “have to pay much more for energy generated from renewable and nuclear sources although it often costs less to produce”.