UK Chancellor Kwasi Kwarteng has abolished the top rate of income tax for the country's highest earners, and announced tens of billions of pounds in spending in a bid to drive up growth to ease the cost-of-living crisis.

In a so-called mini-budget in which he also announced the axing of the cap on bankers' bonuses and added restrictions to the welfare system, he argued that tax cuts are "central to solving the riddle of growth".

He scrapped the 45% higher rate of income tax and brought forward the planned cut to the basic rate to 19p in the pound a year early to April.

Mr Kwarteng also revealed his estimate that the two-year energy bills bailout will cost around £60 billion over its first six months from October.

The package enacting Prime Minister Liz Truss's tax-cutting promises including reversing the national insurance rise and axing the hike to corporation tax came a day after the Bank of England warned the UK may already be in a recession.

The Bank also lifted interest rates to 2.25% - the highest level for 14 years.

Mr Kwarteng said their economic vision would "turn the vicious cycle of stagnation into a virtuous cycle of growth".

By terming it a "fiscal event" rather than a full budget, Mr Kwarteng avoided the immediate scrutiny and forecasts of the Office for Budget Responsibility.

Mr Kwarteng also confirmed that the government would not go ahead with a plan to increase corporation tax to 25%, holding it instead at 19% in a bid to spur economic growth.

Britain's 19% corporation tax rate had been due to rise to 25% in 2023 under plans announced last year by former chancellor Rishi Sunak.

"We will have the lowest rate of corporation tax in the G20," he told parliament. "This will plough almost £19bn a year back into the economy".

Stamp duty, a tax on house purchases, will be cut to help families to afford to buy homes, with the threshold at which it is first paid doubling to £250,000 for home movers.

The nil-band threshold for first-time buyers will also increase to £425,000 from £300,000, he told MPs, adding that the changes are permanent and effective immediately.

"The steps we've taken today mean 200,000 more people will be taken out of paying stamp duty altogether," he said.

Stamp duty is a graduated tax, which rises in steps to 12% on the portion of the property price above £1.5m. There was a stamp duty holiday during the Covid-19 pandemic, which initially increased the nil band to £500,000, stimulating a market which rose to record levels.

The likely announcement of reductions in the tax had been reported in the media, prompting broker Investec to say on Wednesday that cuts would support the housing market, but rising interest rates, the cost-of-living crisis and fears of higher unemployment would remain dominant.

Britain's main opposition Labour Party criticised the government's economic plans on Friday, saying the new prime minister and finance minister were like "two desperate gamblers in a casino" who had run out of ideas.

Rachel Reeves, Labour's finance policy chief, said the fiscal statement had prioritised big business over working people by relying on a theory of "trickle-down economics".

"The prime minister and chancellor are like two desperate gamblers in a casino chasing a losing run," she told parliament. "The argument peddled by the chancellor today isn't a great new idea, or a game changer as the minister said."

Taking aim at a lack of independent scrutiny of plans which went big on tax cuts, emergency support for fuel bills and tax breaks for new so-called investment zones, Ms Reeves described the mini budget as "a budget without figures, a menu without prices".

"What has the chancellor got to hide?" she said, a point echoed by Conservative MP Mel Stride, who also questioned why the government had gone ahead with the plans without new forecasts from the Office for Budget Responsibility.