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Liz Truss defended her mini-budget this morning as she broke her silence in the first of a series of interviews. The Prime Minister is touring regional BBC radio stations in a morning round of interviews and facing a grilling about her economic plans for the first time. Speaking to BBC Radio Leeds, Ms Truss said: “We had to take urgent action to get our economy growing, get Britain moving and also deal with inflation. And of course that means taking controversial and difficult decisions but I’m prepared to do that as Prime Minister.”
It comes as Ms Truss and Kwasi Kwarteng are under pressure to defend a vision for the economy that has spooked markets.
The Chancellor last Friday unveiled a £45 billion package of tax cuts, including the abolition of the 45p rate of income tax for people on more than £150,000, funded by Government borrowing.
But the mini-budget has sparked days of chaos which have seen the pound plunge to record lows against the dollar, while Government borrowing costs have jumped.
In an extraordinary statement on Tuesday, the International Monetary Fund (IMF) criticised the Government’s strategy and urged it to change course.
And the Bank of England yesterday launched an emergency bond-buying programme to prevent borrowing costs from spiralling out of control.
The Bank announced it was stepping in to buy up to £65 billion worth of Government bonds, known as gilts.
It has also signalled it is ready to ramp up interest rates to shore up the pound and guard against increased inflation, which has sparked fears of surging mortgage costs.
There have been reports Cabinet ministers would be asked to draw up efficiency savings for their departments and that benefits may not be hiked in line with spiralling inflation following the fallout from the mini-budget.
The turmoil has led to divisions in the Tory party, while Labour has demanded Parliament, which i currently on a conference recess, is recalled.
Mel Stride, Conservative chairman of the Commons Treasury Committee, said “there’s a lot of concern within the parliamentary party, there’s no doubt about that”.
He told Sky News yesterday: “I don’t want to speculate on the future of the Chancellor other than to say that I think where the party should be at the moment is really uniting at a time of economic crisis.
“The last thing we want now is a political crisis to compound that, and I think really focus on this issue of growth.”
Treasury minister Chris Philp yesterday insisted there would be no consideration “at all” for a change of course by the Government.
He told Sky News: “Getting Britain’s economy growing is so important. Important to raise wages and important to pay the tax bills of the future.”
However, backbench allies of the Prime Minister have insisted she should stick to her plan.
Tory MP Sir John Redwood told Sky News on Wednesday: “My message today is that the Government are right to see the main threat for the year ahead is recession, not inflation.”
Meanwhile, Conservative peer Lord Hannan downplayed the crisis in an article for the ConservativeHome website.
He said: “What we have seen since Friday is partly a market adjustment to the increased probability that Sir Keir Starmer will win in 2024 or 2025 – leading to higher taxes, higher spending, and a weaker economy.”
The Tory peer added: “Some pundits don’t like Truss, others have never forgiven the Tories for Brexit, yet others are horrified by the idea that growth, rather than equality, should be the Government’s priority.
“Fair enough. But let’s be clear-headed about what is happening.”
Lord Frost, the former Brexit negotiator, described the article as an “excellent piece”.
But others mocked it and Labour leader Sir Keir Starmer dismissed his comments as “complete nonsense”.
The crisis comes just days before Tory MPs and members will congregate in Birmingham for Ms Truss’ first party conference as Prime Minister.
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