Category Archives: Economic policy

Liz Truss insists tax cuts will go ahead despite public spending promise

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PM suggests borrowing will rise as she surprises MPs by saying she has no plans to cut public spending

Liz Truss has said the Conservatives will push ahead with tax cuts without cutting public spending, instead allowing borrowing to rise over the next few years.

Senior economists had warned on Wednesday that such a strategy, if set out by Kwasi Kwarteng in the chancellor’s fiscal plan at the end of this month, would be likely to spook investors, creating renewed market turmoil.

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The Bank of England’s lifeboat is in choppy waters with its bond buying

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Pensions hedging crisis shows how the City never seems equipped to handle the next big financial hazard

Pension funds have found themselves embroiled in a byzantine world of exotic financial trading that many of them appear to have badly misunderstood.

On Tuesday, a third rescue mission in little more than a fortnight was announced by the Bank of England, which is reprising its role in the 2008 financial crisis as the City’s lifeboat.

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Pound falls sharply against dollar after Bank confirms bond-buying end date

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Sterling falls more than a cent to below $1.10 after Andrew Bailey tells pension firms they have ‘got to get this done’

The pound has fallen sharply against the dollar after Andrew Bailey warned the Bank of England would not extend its emergency intervention in financial markets beyond this week, after the turmoil sparked by the government’s mini-budget.

Sterling skidded by more than a cent against the dollar to below $1.10 after the Bank’s governor insisted the £65bn scheme to purchase UK government bonds would not be continued beyond the deadline on Friday.

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Starmer’s chief of staff to leave job as Labour leader unveils major party shake-up – UK politics live

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Latest updates: Labour leader hoping to put party on war footing ahead of next election

In the supreme court Dorothy Bain KC, the lord advocate, the Scottish government’s most senior law officer, is now setting out her case.

Here is the 50-page submission to the court setting our her case that was released in July.

Despite the political context of this reference, the questions the court has to decide are limited to technical questions of law. The court will decide them by applying legal principles.

The court will require time after the hearing to prepare its judgement. The hearing is the tip of the iceberg. We also have more than 8000 pages of written material to consider.

Therefore, as usual, is likely to be some months before we get our judgement.

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Truss overrules Kwarteng Treasury pick in bid to calm markets

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Veteran official gets permanent secretary role instead of reformer as fiscal plan is brought forward by three weeks

Liz Truss has overruled Kwasi Kwarteng’s top appointment at the Treasury and handed the role to a veteran Treasury official, one of a series of moves designed to calm markets and backbenchers.

It was also announced that the chancellor will set out plans to shore up the public finances three weeks earlier than planned and publish long-awaited forecasts by the Office for Budget Responsibility at the same time.

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Unfunded tax cuts mean UK ‘will need £60bn spending cuts’

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IFS says Kwasi Kwarteng’s mini-budget will leave ministers making serious reductions in public services

Kwasi Kwarteng will need to find £60bn of savings by 2026 to fill the gap left by unfunded tax cuts and the costs of extra borrowing triggered by a panicked reaction on international money markets to the chancellor’s “mini-budget”, according to the Institute for Fiscal Studies.

The UK will also struggle to hit the chancellor’s 2.5% growth target, with economic forecasts by the investment bank Citigroup that the IFS uses to underpin its analysis showing the UK will struggle to grow at more than 0.8% on average over the next five years.

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Truss and Kwarteng will face fury of Tory MPs in week of crisis meetings

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The PM and chancellor will try to stop panic spreading through the party after their high-risk economic plan threatens a ‘death spiral’

The prime minister, Liz Truss, and the chancellor, Kwasi Kwarteng, will face the wrath of Tory MPs at a succession of crisis meetings in parliament this week as their high-risk economic policies hit their poll ratings and spread panic in all wings of the party.

After a turbulent first five weeks at No 10 and an ill-disciplined, chaotic annual conference in Birmingham last week, Truss is expected to address the 1922 Committee of Tory backbenchers on Wednesday evening after taking on Keir Starmer at prime minister’s questions.

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Kwarteng considers extending mortgage guarantee scheme

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Initiative may continue beyond December as bank bosses raise concerns over mortgage market

The chancellor is considering extending the government’s mortgage guarantee scheme after UK bank bosses raised concerns over the state of the UK’s mortgage market at a high-level meeting at No 11 Downing Street.

The meeting on Thursday – which was attended by chief executives including Alison Rose of NatWest, Charlie Nunn of Lloyds Banking Group, HSBC UK’s Ian Stuart, Mike Regnier of Santander and TSB’s Robin Bulloch – was scheduled amid mounting fears about the potential fallout from rapidly rising mortgage rates.

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Is Liz Truss already fighting to save her premiership? – podcast

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It’s been four weeks since Liz Truss became prime minister and her policies are already facing criticism from senior Conservative MPs. Rafael Behr reports on whether she’ll be able to hold the party together

On Wednesday, Liz Truss addressed her party at the Conservative party conference in Birmingham. She told the party that she was “ready to make the hard choices”, but with some Tory MPs already publicly criticising her policies, are her days as prime minister numbered?

The speech was interrupted by two Greenpeace protesters holding up a banner saying “who voted for this?”, a sentiment shared by the former culture secretary Nadine Dories who tweeted earlier in the week “if Liz wants a whole new mandate, she must take it to the country”.

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Kwasi Kwarteng set to address Tory conference with authority on the line after 45% tax rate U-turn – UK politics live

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Chancellor expected to give changed address after confirming plan to axe top rate of income tax has been scrapped

Q: Where does this leave your credibility?

Kwarteng says he has been in parliament for 12 years. He says ministers do sometimes change their minds.

I decided, along with the the prime minister, not to proceed [with the policy].

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Truss’s mini-budget looks likely to cost the Tories the next election | Pippa Crerar

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Tory MPs fear voters see them as the nasty party again after the prime minister refused to rethink tax cuts for the rich

Liz Truss has long channelled Margaret Thatcher – echoing her rhetoric, her free market instincts and even her clothes – but as the Tory conference kicked off in Birmingham on Sunday many in her party were hoping that she would relinquish ambitions to be the next Iron Lady and drop her mini-budget plans.

There were early glimmers of hope. In an article for the Sun, she admitted her proposals would cause “short term disruption” but that she had an “iron grip” on the country’s finances. Then she told the BBC she understood public concerns. “I do accept we should have laid the ground better,” she said.

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Michael Gove says Liz Truss’s tax cut plans ‘not Conservative’

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Influential former minister hints he will not vote for mini-budget measures, in blow to PM

Michael Gove said Liz Truss’s programme of tax cuts was deeply concerning and “not Conservative”, and hinted he would not vote for them, in a major blow to the prime minister’s authority.

Gove, who was removed as levelling up secretary before Boris Johnson left No 10 but remains a hugely influential Tory MP, said he could not back Truss’s abolition of the top 45p rate of tax, or the removal of the cap on bankers’ bonuses.

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Liz Truss admits she should have ‘laid ground better’ before mini-budget and says cabinet not consulted about 45% top rate tax cut – live

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Latest updates: PM vows to press ahead with mini-budget plans and dismisses objections to top rate of tax being axed

Q: Are you absolutely committed to getting rid of the 45% rate of tax?

Yes, says Truss.

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Liz Truss refuses to rule out spending cuts to pay for reduced tax rates

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PM says she accepts ‘we should have laid ground better’ after mini-budget sparked economic turmoil

Liz Truss has refused to rule out public spending cuts and a real-terms drop in benefits to help pay for the mini-budget, as she sought to quell fury over her handling of the economy by admitting she should have “laid the ground better”.

The prime minister offered a sliver of remorse for the way last Friday’s mini-budget was received. There was a temporary collapse in the value of sterling against the dollar, a rebuke from the International Monetary Fund and warnings that interest rates could be hiked again.

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‘Disconnected from reality’: Tory MPs plan rebellion over Liz Truss’s economic agenda

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Prime minister is facing the same fate as Theresa May when the Commons returns and could even be removed as leader

Liz Truss is already facing the possibility of crippling parliamentary rebellions over welfare, planning and a new wave of austerity, as MPs warn that No 10 has become “disconnected from reality”.

With some Conservatives in talks with Labour over how to block elements of the prime minister’s sweeping plans, senior Tories believe that Truss is now heading into the bruising parliamentary warfare that characterised Theresa May’s beleaguered premiership.

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Serco injected £60m to prop up pension fund after market meltdown

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£1bn scheme is latest to scramble to raise cash after chancellor’s tax-cutting mini-budget sparks turmoil

The pension scheme trustees at the government contractor Serco have been forced to tap the company for £60m of emergency support after the UK’s financial markets meltdown this week.

Serco’s £1bn pensions scheme is the latest to scramble to raise cash after a plunge in the pound and a meltdown in UK bond prices triggered calls on fund managers to provide collateral for niche financial products they had taken out to hedge against swings in the value of their investments.

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Why OBR forecast is being held back until Kwarteng’s next fiscal plan

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Huge policy changes are needed to get UK back on track – so early publication would give an incomplete picture

The message the government wanted to get out was clear. After less than a month as prime minister, Liz Truss had converted from vocal scourge of Treasury orthodoxy to an active supporter.

Given the fallout in financial markets after the not-so-mini-budget, Truss and her chancellor, Kwasi Kwarteng, laid on a heavily stage-managed meeting on Friday with officials from the Office for Budget Responsibility, the Treasury’s independent economic forecaster, to try to smooth over the mess.

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Truss and Kwarteng to hold back OBR forecasts for six weeks

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PM and chancellor say they will not publish projections until late November despite them being ready next week

Liz Truss and Kwasi Kwarteng will refuse to release forecasts from the Office for Budget Responsibility (OBR) until more than six weeks after receiving them, despite calls for them to be published as soon as possible.

The prime minister and chancellor said they would only publish the independent forecasts on 23 November alongside a fiscal statement, despite them being ready on 7 October.

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OBR: we offered to update forecasts in time for ‘mini-budget’ – live

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Watchdog said it was ready to supply information, but was not asked to do so by Kwasi Kwarteng

Q: Can you reassure listeners that your judgment is better than that of people like the IMF and the Bank of England, who have criticised the mini-budget?

Truss says:

I have to do what I believe is right for the country and what is going to help move our country forward.

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Germany unveils €200bn help for consumers and says it won’t follow UK’s route

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Finance minister announces €200bn fund to protect citizens from rising gas prices driven by Russia’s war in Ukraine

Germany’s finance minister has vowed that he will not follow the UK “down the path of an expansionary fiscal policy” as his government announced a €200bn (£177bn) fund designed to protect consumers and businesses from rising gas prices driven by Russia’s war in Ukraine.

Europe’s largest economy will reactivate an economic stabilising fund previously used during the global financial crisis and the coronavirus pandemic, said the chancellor, Olaf Scholz, at a joint press conference with the finance minister, Christian Lindner, and the economic minister, Robert Habeck, on Thursday afternoon.

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