Britain could announce a reduction in stamp duty this week to stimulate the housing market, as part of a push for economic growth which Prime Minister Liz Truss is putting at the centre of her leadership.
The government did not deny a report in The Times that a cut in stamp duty would be part of a mini-budget to be unveiled by Chancellor of the Exchequer, Kwasi Kwarteng, on Friday.
Higher bonuses for City of London bankers are also under discussion despite their political unpopularity, in what one government minister, Gillian Keegan, said would be a package of “pro-growth, pro-business” measures.
Ms Truss said she was willing to risk unpopularity to bring in low-tax, pro-growth policies, which she acknowledged would help the rich but insisted would ultimately lead to higher wages and investment.
She will preach a similar message to world leaders at the UN General Assembly on Wednesday, where she will tell allies to ensure they have the “strong economic foundations they need to constrain authoritarianism”.
“The free world needs this economic strength and resilience to push back against authoritarian aggression and win this new era of strategic competition,” she was expected to say.
Her preparations for a first bilateral meeting with Joe Biden were clouded on Tuesday when the US President sent a tweet saying: “I am sick and tired of trickle-down economics. It has never worked.”
The term is often associated with 1980s conservative figureheads Margaret Thatcher and Ronald Reagan, and has been applied by critics to Ms Truss’s focus on “growing the size of the pie” rather than redistributing wealth.
But Ms Keegan, Undersecretary of State at the Foreign Office, rejected the label and said the government did not believe the president’s tweet was aimed at Ms Truss’s policies.
“You cannot say what we’ve done is trickle-down economics … we’ve just put a massive package in place” to support people with energy bills, she said on morning television on Wednesday.
“Pro-growth helps everybody and pro-business helps everybody. Most of us are employed in businesses.”
Stamp duty, the land tax paid for homes worth more than £125,000 ($142,000) was temporarily lowered in 2020 to stimulate the economy during the coronavirus pandemic. Ministers said house sales increased as a result.
But Siobhain McDonagh, an opposition Labour MP, said a cut would merely inflate house prices and leave first-time buyers more squeezed out than ever.
Ms Truss promised during the Conservative leadership campaign to help first-time buyers by making it easier to obtain a mortgage. She said she would promote house-building in “model towns” and low-tax investment areas.
She promised to scrap what she called “Soviet-style housing targets” imposed by central government, instead handing power to local residents.