Prime Minister Liz Truss has insisted the Government’s tax-cutting measures are the “right plan” in the face of rising energy bills and to get the economy growing despite market turmoil sparked by the Chancellor’s mini-budget.
In her first public comments since the mini-budget market chaos, Ms Truss defended Chancellor Kwasi Kwarteng’s measures, insisting “urgent action” was needed, although she admitted the Government’s decisions have been “controversial”.
The Prime Minister told BBC Radio Leeds: “We had to take urgent action to get our economy growing, get Britain moving and also deal with inflation.
“Of course that means taking controversial and difficult decisions but I am prepared to do that as Prime Minister because what is important to me is that we get our economy moving, we make sure that people are able to get through this winter and we are prepared to do what it takes to make that happen.”
She said the mini-budget was the “right plan”, in spite of mounting calls – including from the International Monetary Fund (IMF) – for a U-turn on some of the policies announced last Friday after the pound sunk to a record low of 1.03 against the US dollar on Monday.
As Ms Truss took to the airwaves, the FTSE 100 Index in London fell by more than 2% at one stage following a rollercoaster ride of volatility on Wednesday, with the bounce from the Bank of England’s intervention fading as investors remained worried about the Government’s economic plans.
On Wednesday, the Bank launched an emergency government bond-buying programme to prevent borrowing costs from spiralling out of control and stave off a “material risk to UK financial stability”.
The Bank announced it was stepping in to buy up to £65 billion worth of government bonds – known as gilts – at an “urgent pace” after fears over the Government’s tax-cutting plans sent the pound tumbling and sparked a sell-off in the gilts market, which left some UK pension funds teetering on the brink of collapse.
Bull in a china shop
Commenting on the turbulence, Wes Wilkes, CEO at wealth managers IronMarket, said the PM is acting “like a bull in a china shop”.:
“The Chancellor and PM are exacerbating a self-inflicted problem and are displaying breathtaking arrogance and intransigence in front of extreme market turmoil.
“During the PM’s interview on Thursday morning, bond yields rose by around 4.5 per cent and we saw a sharp sell-off in UK equities.
“This volatility will continue unless the momentous policy error that was the mini-Budget is reversed or watered down.
“We have a PM acting like a bull in a china shop while the Bank of England follows behind her picking up the broken bits to try and salvage some credibility in our currency and economy.
“We have a rate rise to come next week, too. Strap in and strap in tight.”