Joe Biden has called Liz Truss’s abandoned plan to cut UK taxes a “mistake” and said he worries other countries’ fiscal policies could hurt the US amid “global inflation”.
Biden said it was “predictable” that Britain’s new prime minister was forced to abandon plans for aggressive tax cuts on Friday without identifying spending savings after the Truss proposal sent shockwaves through global financial markets.
This marked an unusual criticism from the US president of the domestic policy decisions of one of his closest allies.
“I wasn’t the only one who thought it was a mistake,” Biden said. “I don’t agree with the policy, but it’s a matter for the UK.” He criticized the lack of “sensible policies” in other countries regarding economic growth.
Biden’s comments came after White House officials declined for weeks to criticize Truss’ plans, though they stressed they were closely monitoring the economic consequences. The US president spoke to reporters at an Oregon ice cream shop during an unannounced campaign for Democratic gubernatorial candidate Tina Kotek. Democrats face a tough political environment in the US amid Republican criticism of their handling of the economy.
Biden said he was not concerned about the strengthening of the dollar, which has hit a new record against the pound in recent weeks, boosting imports but making US exports more expensive for the rest of the world.
The president said the U.S. economy is “pretty damn strong … I’m worried about the rest of the world. The problem is the lack of economic growth and smart policies in other countries.
“It’s global inflation, it’s a consequence.”
Trus’s new chancellor, Jeremy Hunt, said the mini-budget of Truss and his predecessor, Kwasi Kwarteng gone “too far too fast” as he effectively showed the demise of the Prime Minister’s economic vision.
“We have to be honest with people and we’re going to have to make some very difficult decisions on both spending and taxation to reduce the debt, but when we make those decisions we think first and foremost about how to protect and help those who are struggling . families, businesses and people”.
Hunt is expected to announce that plans to cut the basic income tax rate next April will be delayed by a year. The cut to 19% will now take effect at a time previously proposed by Rishi Sunak, the former chancellor who was Liz Truss’ main rival for the leadership.
From the Associated Press