Market expert gives verdict on U-turn on scrapping 45p tax rate

The video discusses the UK government's decision to reverse a planned cut to the 45% income tax rate due to market backlash, public disapproval, and internal party pressure. The unfunded nature of the tax cuts led to economic instability, prompting a U-turn. The government now faces challenges in restoring credibility and planning future economic measures. Market reactions have been volatile, with slight improvements following the reversal, but further clarity and sensible planning are needed to stabilize the economy.

What was the main reason for the market's negative reaction to the tax cuts?

• The tax cuts were fully funded.

• The tax cuts were seen as inflationary and economically harmful.

• The tax cuts were popular among the public.

• The tax cuts were supported by the Conservative Party.

Which of the following was NOT a reason for the government's U-turn on the tax policy?

• Support from the Conservative Party

• Internal pressure within the party

• Public uproar

• Market reaction

How did the public perceive the 45% tax cut?

• As unnecessary and favoring the wealthy

• As a relief for those on benefits

• As necessary and beneficial

• As a measure to support the economy

What challenge does the government face after reversing the tax cuts?

• Reducing public spending

• Implementing more tax cuts

• Restoring credibility with the public and markets

• Increasing the tax rate further

What could lead to a more positive market reaction in the future?

• Announcing more unfunded tax cuts

• Implementing economically damaging policies

• Ignoring public and market feedback

• Developing a funded and sensible economic plan