The chancellor has called for unity within the Tory party as a new poll gave Labor a 33-point lead over the Conservatives.
Liz Truss and Quasi Quarteng insisted that their controversial £45bn tax cut package unveiled on Friday is the “right plan” to economy touching, despite the ensuing chaos on the financial markets and the fear of skyrocketing mortgage bills.
Worry under Tory MPs that the financial fallout could hurt them at the polls were underlined dramatically when a YouGov opinion poll gave Labor a huge 33-point lead over the Conservatives on Thursday.
It is considered the largest poll a political party has had since the 1990s.
Amid reports of unease among some Tory MPs following the market chaos of recent days, the Chancellor sent a message to his colleagues on Thursday calling for unity.
“I understand your concern,” Mr Kwarteng wrote in the Sky News report. “We are one team and we have to stay focused.
“There is tremendous volatility in the global market – not just a problem in the UK – fueled by war, Covid hangover and a super strong USD that all other major currencies are struggling with (see Japan this week; Euro down).
“The path we took was untenable — we couldn’t just continue raising taxes.”
He promised to show that the government’s plan is “firm, credible and will work to boost growth” before concluding: “The only people who win if we divide is the Labor Party”.
In their first public comments since the pound hit a record low on Monday, neither the Prime Minister nor the chancellor has directly commented on the turmoil created by the so-called mini-budget.
During a round of BBC interviews on local radio, Ms Truss said the government needed to take “urgent measures” to get the economy going again and protect consumers from rising energy costs.
And on a visit to an engine factory in Darlington, Mr Kwarteng said the package he announced in the House of Commons on Friday was “absolutely essential” if the economy was to generate the revenue needed to fund public services.
However, Labor warned that ordinary families would pay the price with thousands of pounds added to mortgage bills as the Bank of England will be forced to raise interest rates to support the pound.
Some Conservative MPs have now called for an urgent change of course from the Prime Minister.
Julian Smith, a former Cabinet minister, urged the government to “take responsibility” for the crisis.
“The government must cut 45p, take responsibility for the link between last Friday and the impact on people’s mortgages and make it clear that it will do everything possible to stabilize markets and protect public services,” the Tory tweeted. member of parliament.
Former Science Secretary, also George Freeman, called on the cabinet to meet and agree on a “Plan B”.
“The economic package of loans and tax cuts announced last week clearly cannot command market or voter confidence,” he said on Twitter.
Another MP, Sir Charles Walker, admitted his party would likely lose an election if it were called today based on the polls, but ruled out the possibility of a leadership challenge against Ms Truss. “We’ve made our bed, we have to lie in it,” he said.
Meanwhile, Mr. Kwarteng came under renewed pressure to put forward his planned statement outlining how he plans to get public finances back on track, after the Office for Budget Responsibility (OBR) said it would shut down by October 7. could come up with a preliminary set of forecasts.
The chancellor previously said he would present his medium-term fiscal plan on Nov. 23, explaining how he would reduce debt as a percentage of GDP, in addition to updated OBR forecasts.
But as there are no forecasts to accompany Friday’s ‘fiscal event’, which is seen as a key factor in shocking the markets, many Tory MPs believe it is too long to wait if they want stability. to recover.
Mel Stride, the conservative chairman of the Commons Treasury Committee, said it should be brought forward to the end of October — or even earlier — because there was an “urgent need” to boost market confidence.
The Chancellor has also faced external criticism from the UK’s biggest ally, as US Commerce Secretary Gina Raimondo said the UK’s radical package of measures “will not fight inflation” or slow economic growth in the long run. term will promote.
“Investors, business people want world leaders to take inflation very seriously, and it’s hard to see that with this new government,” she told Channel 4 News.
But Mr. Kwarteng brushed off the suggestion that his mini-budget had been a “major economic disaster” on Thursday, saying: “Without growth you won’t get the public services, we won’t generate the revenue and tax revenue to pay for public services.” .
“That’s why the mini-budget was absolutely essential to relaunch the growth debate and focus on delivering much better results for our people.”
The prime minister also appeared to be doubling down on her support for the plan, as she told BBC Radio Leeds: “We needed to take urgent action to grow our economy, get Britain moving and also tackle inflation.
“Of course that means making controversial and difficult decisions, but I’m willing to do that.”
Their comments came after the Bank launched an emergency government bond-buying program on Wednesday to prevent borrowing costs from spiraling out of control and to avert a “material risk to the UK’s financial stability”.
It bought £65 billion worth of government bonds – also known as government bonds – at an “urgent pace” after fears over the government’s tax-cutting plans tumbled the pound and triggered a sell-off in the gold market, leaving some of the UK’s pension funds teetering on the edge of the abyss.
On Thursday, the pound regained some ground, rising above $1.1 for the first time since last Friday.
However, the FTSE 100 fell about 2% to 6,864 – its lowest point since March this year amid a global sell-off, while yields on 10-year UK government bonds rose to 4.14%.
In Northern Ireland, the Bank’s chief economist, Huw Pill, highlighted warnings that they would need to raise interest rates sharply, noting that there was “undoubtedly a UK-specific component” to recent market movements.
His comments contrasted sharply with Ms. Truss, who in her interviews blamed “Vladimir Putin’s war in Ukraine” for driving up global energy prices.
For Labour, Shadow Chancellor Rachel Reeves called on Ms Truss and Mr Kwarteng to roll back their “kamikaze budget”.
“It’s a shame that people’s family finances across the country are being put at risk simply so the government can give huge unfunded tax cuts to the richest companies and those who make hundreds of thousands of pounds a year,” she said.
“This is a serious situation in Downing Street and is the direct result of the reckless actions of the Conservative government.”
Previously, unions called for a “cast iron guarantee” that there would be no more cutbacks in government spending after Chris Philp, chief finance secretary, confirmed Whitehall’s departments had been instructed to conduct an “efficiency and prioritization exercise” in an effort to reduce the savings.
Speaking to broadcasters, Mr Kwarteng said that despite pressure on public finances, the government would maintain the “triple lock” state pension, but refused to commit to increasing benefits in line with inflation.
“It’s premature for me to make a decision on that, but we’re absolutely focused on making sure the most vulnerable in our society are protected from what could be a challenge,” he said.