U.K. Makes Major U-Turn on Tax Cuts

LONDON—U.K. Chancellor of the Exchequer Kwasi Kwarteng on Monday ditched a plan to cut the 45% top rate of income tax after turmoil in the country’s financial markets, an intervention by the Bank of England and the threat of large-scale rebellion by Conservative Party lawmakers.

The U-turn is a major setback for new Prime Minister Liz Truss, who based her leadership on a sweeping revamp of the British economy. The government, which defended the measure announced late last month as recently as Sunday, buckled under the pressure of international investors who balked at the scale of unfunded tax cuts and Conservative Party lawmakers shocked by polls showing they faced a near wipeout at the next general election.