Category Archives: Mini-budget 2022

Kwasi Kwarteng reportedly believes Liz Truss ‘only has a few weeks’ – as it happened

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Source close to sacked chancellor briefs Times that ‘wagons are still going to circle’ around embattled prime minsiter

The Conservative peer, Ed Vaizey, said he disagreed with the international trade secretary, Greg Hands, who earlier said Kwasi Kwarteng’s early return is not unusual. “It is quite unusual for this to happen,” he said.

Speaking to Sky News, Vaizey said the chancellor cutting his trip to the US short is “not a good sign”. He said:

I’m afraid the chancellor coming back a day early doesn’t fill one with confidence.

The fact that people were speculating about the prime minister’s leadership this early in her premiership is not ideal, but I think he’s just got to bite the bullet. He’s got to try to give the markets confidence in the British economy.

If he can do that then perhaps he can say: ‘Well, I had to do some difficult choices, slightly humiliating choices, but the result is stabilisation and I can move forward.’

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Liz Truss bows to pressure with corporation tax U-turn ‘on the table’

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Speculation that reversal on leadership campaign pledge risks split with her chancellor, Kwasi Kwarteng

Liz Truss has bowed to intense pressure from Conservative MPs and the markets by agreeing to redraw her mini-budget, paving the way for a major U-turn on her signature corporation tax cut.

In another serious blow to her authority as prime minister, government sources told the Guardian that a climbdown on the plan to scrap the rise in corporation tax was now “on the table”.

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No 10 warns of ‘difficult decisions’ on public spending despite Truss’s vow to avoid cuts – UK politics live

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Statement from No 10 comes straight after PM told MPs she was ‘absolutely’ committed to avoiding public spending cuts

Sajid Javid, the former Tory chancellor, has been speaking at an event organised by the Legatum Institute thinktank this morning. As Chris Smyth from the Times reports, Javid said the turmoil in the markets was caused by the fact that the tax cuts in the mini-budget went “way beyond” what Liz Truss promised during the leadership campaign, and by the fact that her energy bills bailout was also much bigger than expected.

The government has drawn up a plan to cap the unit cost of gas and electricity for two years. Labour proposed its own plan to freeze energy bills, but it only proposed a commitment for six months.

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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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Liz Truss on verge of major U-turn on real-terms benefits cut

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Exclusive: Tory MPs warn PM she would lose vote on increasing benefits only in line with earnings rather than inflation

Liz Truss is teetering on the edge of performing another big U-turn as Tory MPs warned she would lose a vote on delivering a real-terms cut to benefits while new research showed the move could push an extra 450,000 people into poverty.

Despite desperate pleas for party unity from senior ministers after weeks of bitter infighting, the row over welfare threatened to overshadow the prime minister’s attempt to reassert her authority when the Commons returns from recess on Tuesday.

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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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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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Labour demands names of guests at champagne event Kwarteng attended

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Drinks reception with wealthy Tory donors took place on same day the chancellor delivered mini-budget

Pressure is growing on the Tory party to provide a full list of attendees at a private champagne reception attended by the chancellor, Kwasi Kwarteng, hours after he delivered his mini-budget.

Anneliese Dodds, the Labour chair, has written to her Conservative counterpart, Jake Berry, calling on him to release a list of those in attendance and whether they pledged donations or paid a fee to be there.

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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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Kwarteng is sticking to his guns on tax and spending cuts. But what he really needs is luck

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The chancellor appears unwilling to reverse any of the measures in his mini-budget. If he is to survive, it may be down to factors beyond his control

Kwasi Kwarteng’s inept handling of the government’s finances since he took office last month has left Liz Truss cornered. The prime minister must play for time and piece together a rescue plan by the end of November, along with a more rounded budget that preserves her tax-cutting agenda while also appearing responsible to financial markets watchful for the next misstep.

Treasury officials, rudderless after the departure of two permanent secretaries (Tom Scholar and deputy Charles Roxburgh) in the space of four months, will be under pressure to find a formula that also satisfies the cautious instincts of the government’s independent economic forecaster, the Office for Budget Responsibility (OBR), which is inclined to dismiss policy “quick wins” as ineffectual until evidence proves otherwise.

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‘UK travel is on sale’: plunging pound attracts US visitors

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Operators catering for inbound tourists enjoy best month for bookings in three years

The plunging pound may cause British holidaymakers to choke at the prices if and when they next choose to go abroad. But one slice of the travel industry is seeing a silver lining in the storm clouds.

Tour operators catering for visitors are quietly calling it their best month for bookings since October 2019 as US tourists take advantage of sterling’s tumble.

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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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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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Bank of England in £65bn scramble to avert financial crisis

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Bank of England left with no action but to intervene after Kwasi Kwarteng’s mini-budget

The Bank of England has been forced into emergency action to halt a run on Britain’s pension funds after the impact of Kwasi Kwarteng’s ill-received mini budget prompted fears of a 2008-style financial crisis.

Threadneedle Street said the fallout from a dramatic rise in government borrowing costs since the chancellor’s statement had left it with no choice but to intervene to protect the UK’s financial system.

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Truss ‘standing by Kwarteng’ as Treasury defends plans despite market turmoil – as it happened

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No 10 says PM has faith in chancellor, as Treasury minister says tax cuts are the ‘right plan’. This blog is now closed

Q: When would you get debt falling as a proprotion of GDP?

Starmer says Labour does want to get that down.

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‘Great British Railways is dead’: rail industry at lowest ebb since the days of Railtrack

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Grant Shapps ‘revolutionary’ GBR plan faces huge challenges

Barely 18 months have elapsed since a starry-eyed Grant Shapps unveiled the blueprint for a “revolutionary” Great British Railways, but it already has the flavour of an optimistic misnomer. Even an adequate British railway would be welcomed by those passengers stranded by everything from Avanti’s collapse to failing infrastructure and unprecedented strikes.

Only a fraction of the timetabled trains continue to run between London and Britain’s biggest cities, though operator Avanti has pledged to start its recovery to full service this week. National strikes, the likes of which had not been seen for 30 years, are now a regular occurrence, with little sign of breakthrough in talks. Infrastructure projects have been pared back or shelved, with the public all but gaslit with reannounced schemes for new railways.

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Labour says financial turmoil is ‘just the tip of the iceberg’

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Shadow health secretary condemns Kwasi Kwarteng’s ‘reckless gamble’ and says Labour ‘cavalry is coming’

The shadow health secretary, Wes Streeting, has said the “cavalry is coming” with the Labour party as he warned that the current turmoil on financial markets was “just the tip of the iceberg”.

Streeting criticised last week’s mini-budget from the chancellor, Kwasi Kwarteng, as a “reckless gamble”.

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Sterling slides back towards record low despite Bank of England and Treasury attempts to reassure markets – business live

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Bank of England issues statement saying it ‘will not hesitate’ to change interest rate but has not implemented an emergency rise

We’ve now reached the point where the Bank of England needs to step in in order to regain the initiative, warns Paul Dales of Capital Economics.

Dales says governor Andrew Bailey has two options.

That could involve something like a 100bps or 150bps hike in interest rates (to 3.25%/3.75%), perhaps as soon as this morning.

By bringing forward a lot of the policy tightening that might needed to have happened anyway, the Bank would demonstrate in no uncertain terms that whatever the government does it will ensure that inflation returns to 2%. This would go a long way to easing the crisis.

“The bank, and indeed the Government, have indicated that they are going to take their next decision in November and publish forecasts and, so on that point, the worry is that they may have to take action a bit sooner than that.”

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City sceptical about benefits of scrapping cap on banker bonuses

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Sources at largest banks say the did not lobby for move nor expect it to result in major changes to pay packets

When City of London executives were summoned to No 11 Downing Street earlier this month, they were promised reforms that would boost growth, attract talented bankers and usher a new era of prosperity for financial services.

But what the chancellor, Kwasi Kwarteng, failed to mention to bank bosses was that their pay would become a lightning rod for controversy in the mini-budget that followed.

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