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Liz Truss and Kwasi Kwarteng have come under fire after the mini-budget they unveiled on Friday caused the pound to tank against the dollar and prompted the Bank of England to intervene to avoid a financial crisis. BBC Radio Kent host Anna Cookson put the Prime Minister on the spot as she questioned whether the reaction to the policy would push her into a U-turn. But Ms Truss rejected the suggestion and defended the Government’s action as necessary to help Britons cope with the ongoing cost of living crisis.
Ms Cookson said: “This is a crisis and many people are saying you made it worse by your actions.
“Are you going to reverse what was announced in the mini-budget in order to make things at least better now for my listeners who are not sleeping at night?”
Ms Truss hit back: “I don’t accept the premise of the question. The action we’ve taken has been helping people with their fuel bills, that will start off this weekend.
“People are going to pay less National Insurance. But we are facing difficult economic times, I don’t deny this.
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“This is a global problem. What is absolutely right is the Government stepped in and acted at this difficult time.”
In a series of interviews for local BBC radios, Ms Truss insisted: “This is the right plan that we’ve set out.”
Chancellor Kwarteng sparked turmoil in financial markets when he delivered a plan to cut taxes without detailing the impact on the public finances or how the government would reform the economy to spur growth.
The pound sank and British Government bond yields soared, forcing the Bank of England to revive its bond-buying programme in an emergency move on Wednesday to shore up pension funds.
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The Prime Minister said the Government had to take urgent and decisive action to protect households and businesses from surging energy bills.
She added: “Of course, that means taking controversial and difficult decisions. But I’m prepared to do that as prime minister because what’s important to me is that we get our economy moving.”
Former BoE Governor Sir Mark Carney also slammed the mini-budget, saying the absence of scrutiny of the Government’s plans by the UK’s independent forecasters, the Office for Budget Responsibility (OBR), has compounded the market woes.
He told BBC Radio 4’s Today programme: “There was an undercutting of some of the institutions that underpin the overall approach – so not having an OBR forecast is much-commented upon and the Government, I think, has accepted the need for that, but that was important.”
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Mr Carney added: “The message of financial markets is that there’s a limit to unfunded spending and unfunded tax cuts in this environment, and the price of those is much higher borrowing costs for the government and mortgage holders and borrowers up and down the country.
“There was an undercutting of some of the institutions that underpin the overall approach, so not having an OBR forecast is much common to the plan and the government has accepted the need for that, but that was important.
“Working at some crossed purposes with the bank in terms of short-term support for the economy.”
He added: “Unfortunately having a partial budget, in these circumstances – tough global economy, tough financial market position, working at cross-purposes with the Bank – has led to quite dramatic moves in financial markets.”
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