ressure kept piling up Liz Truss and Quasi Quarteng on Thursday, after the pair insisted their £45bn tax cut package was the “right plan” to get the economy moving, despite financial market chaos and fears of skyrocketing mortgage bills.
In their first public comments since the pound hit a record low on Monday, neither the Prime Minister nor the chancellor directly commented on the turmoil caused by his 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.
Fears among Tory MPs that the financial fallout could hurt them at the polls was underlined dramatically after a YouGov poll for The Times showed Labor had a massive 33-point lead over the Conservatives.
With reports of unease among Tory MPs following the market chaos of recent days, some have 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, while former Science Secretary George Freeman called on the Cabinet to meet and agree on a “Plan B” .
Another MP, Sir Charles Walker, admitted his party would be “wiped out” if elections were held tomorrow, but ruled out the possibility of a leadership challenge against Ms Truss.
“If there are general elections tomorrow there won’t be, but if there were we’d be wiped out…we’d cease to exist as a functioning political party,” he said.
Meanwhile, Mr. Kwarteng came under further pressure to explain why he made his mini-budget without a current economic forecast after the Office of Budget Responsibility revealed it had prepared a draft forecast for the new chancellor on his first day in office. .
In a letter to the Westminster leader of the Scottish National Party, Ian Blackford and the party shadow chancellor Alison Thewliss, the OBR chairman confirmed that on 6 September, its first day in office, the body will send a draft economic and fiscal forecast to the new chancellor. ”.
Richard Hughes wrote: “At the time, we offered to update that forecast to take into account subsequent data and to reflect the economic and fiscal impact of any policies announced by the government, in time for it to coincide with the ‘fiscal event’. ”
He said the OBR had not been instructed to prepare an updated forecast, but confirmed it “would have been able to do so to a standard that met the legal requirements of the Charter for Budgetary Responsibility”.
Blackford called the details in the letter “utterly damning”.
“The Prime Minister and the Chancellor cannot continue to evade their responsibility,” he said.
Mr. Kwarteng is also facing calls to put forward his planned statement outlining how he plans to get public finances back on track after the OBR said it could produce a preliminary set of forecasts by October 7.
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.
A spokesman for the Ministry of Finance said: “The Chancellor has instructed the OBR to prepare an economic and fiscal forecast to be published on November 23. He will also outline the government’s medium-term budget plan, that will build on the commitment to reduce debt as a medium-term share of GDP.”
Mr. Kwarteng had previously brushed aside suggestions that his mini-budget had been a “major economic disaster”, saying: “Without growth, you’re not going to get the public services, we’re not going to generate the income and tax revenues 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 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 – known as gilts – 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.
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.