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Liz Truss and Joe Biden clash over economic policy ahead of US meeting

Liz Truss clashed with Joe Biden over economic policy ahead of a meeting at the UN summit in New York as the US president lashed out at “trickle-down economics”.

The prime minister admitted on Tuesday that his own tax-cutting plans will initially benefit the wealthy more than the rest of Britain – stressing that long-term economic growth “would benefit everyone”.

Ms Truss also seemed to suggest that her government was prepared to lift the cap on banker bonuses in the City of London, despite widespread outrage among MPs, unions and economists over the proposal.

It came as Mr. Biden said he was “sick and tired” of the right-wing economic theory that cutting taxes on corporations and the rich will see benefits “drip” into the pockets of the least well-off.

But No. 10 said it would be “ridiculous” to suggest that Mr Biden’s criticism was directed at Ms Truss. Her official spokesperson said: “Any suggestion that it is in any way direct criticism of British policy would be ludicrous. The economies of no two countries are structured in the same way – each has unique challenges.”

Asked in New York about the fairness of her own tax plans, the prime minister told Sky News: “What we know is that people with higher incomes generally pay more taxes, so when you cut taxes there’s often a disproportionate benefit because those people pay more taxes in the first place.”

Asked by the BBC about allowing higher bonuses to bankers and whether people should ask “whose side” she was on, the prime minister rejected the idea that the bonus limit introduced in the wake of the 2008 financial crash , could be deleted . “What I want to see is a growing economy,” she said.

The Prime Minister added: “If that means making tough decisions that will help Britain become more competitive, help Britain become more attractive, and help more investment flow to our country, then yes, I am absolutely willing to make those decisions.”

Ms. Truss said she was willing to take unpopular steps in her quest for growth. “Not every measure will be popular,” she said — stressing that she was focusing on “increasing the pie” rather than making sure the benefits of the growth are distributed fairly.

On Wednesday, Ms Truss’ government will release new details about its plan to cut businesses’ energy bills for six months. Asked about companies’ demand for a longer-term plan, the Prime Minister said: “We will provide longer-term support. And that also applies to businesses such as pubs.”

But business leaders said: The independent They fear Wednesday’s statement would leave businesses “in the dark,” and they urged the government to specify exactly how and when the bills will be cut. Meanwhile, Tory MPs warned that the size of the package would have to be “huge” if the government is to save the high street this winter.

The Prime Minister and her Chancellor Kwasi Kwarteng are also finalizing details of Friday’s mini-budget, which the Treasury has labeled a “growth plan” and which could mean the end of a strict cap on bonuses from bankers introduced across the EU after the financial Clash.

Mr. Kwarteng is expected to announce the creation of low-tax and low-regulated investment zones. He would also consider a bold plan to put forward a 1p cut in the base income tax rate, which would not take effect until 2024.

Ms Truss and Mr Biden are expected to discuss the economy, the energy crisis and the Northern Ireland protocol in New York on Wednesday, where they attend events as part of the UN General Assembly.

In a post on Twitter ahead of the talks, Biden said: “I’m tired of the drip economy. It never worked. We are building an economy from the bottom up and out of the middle.”

While the message appeared to be intended for a domestic American audience, it underlined the economic and political divide between the Democrat in the White House and the free-market Tory in No. 10.

The White House also made it clear that Mr Biden opposes any unilateral attempt by Mrs Truss to tear up the Northern Ireland protocol, out of frustration with her legislative plan to give British ministers the power to overturn the agreement.

US National Security Adviser Jake Sullivan said Biden would “talk to her in detail” about his desire to protect the Good Friday Agreement, and that the UK and the EU are “working out a practical outcome” on trade barriers.

The senior White House official also downplayed the chances of an early post-Brexit free trade agreement between the US and the UK, saying it will “take a long time to negotiate”.

Ms Truss said on Tuesday that she has accepted that negotiations on trade agreements with the US will not resume for several years. “I don’t expect those to start in the short to medium term,” she said.

The prime minister also met French President Emmanuel Macron at the UN summit on Tuesday. She tried to strike a conciliatory tone ahead of the talks, though she declined to say whether she believes Macron is a “friend or foe”.

Downing Street said the pair did not discuss unauthorized crossings of the Channel by migrants or the protocol, with the prime minister’s official spokesman insisting that the stalled Rwanda policy is the “long-term solution” for crossings.

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