LIZ TRUSS’S ECONOMIC vision appeared doomed today, as she sought to stay in power despite an increasingly shaky-looking premiership.
New Chancellor Jeremy Hunt, brought in to replace the sacked Kwasi Kwarteng and to restore credibility to Downing Street, spent yesterday effectively trashing the mini-budget and the set of policies that brought Ms Truss to power.
Amid warnings of “difficult decisions” to come over the next two weeks, Mr Hunt and Ms Truss will meet in her Chequers residence today as tax rises and spending cuts loom on the horizon.
The Chancellor, who spent yesterday also meeting with Treasury officials, insisted that he and the Prime Minister were a “team” as he said that his priority was “growth underpinned by stability”.
“The drive on growing the economy is right – it means more people can get good jobs, new businesses can thrive and we can secure world class public services. But we went too far, too fast,” he said.
Earlier, he told broadcasters: “Spending will not rise by as much as people would like and all Government departments are going to have to find more efficiencies than they were planning to.”
“And some taxes will not be cut as quickly as people want. Some taxes will go up. So it’s going to be difficult.”
As Mr Hunt begins his job of putting together a fresh budget for October 31 one possible plan, as reported in the Sunday Times, would be to delay his predecessor’s aim of reducing the basic rate of income tax by a year as part of a wider package designed to calm the financial markets.
Earlier, Governor of the Bank of England Andrew Bailey said he spoke to Mr Hunt on Friday after his appointment as he warned that interest rates may have to be raised higher than initially expected to tackle inflation.
Speaking from Washington, he said the pair had a “meeting of minds” on the issue of “fiscal sustainability” as he noted the fact the Office of Budget Responsibility is now “very much back in the picture”.
US President Joe Biden also appeared to join in the criticism of Ms Truss’s plan, telling reporters: “I wasn’t the only one that thought it was a mistake,” and calling the outcome “predictable”.
Asked about her original economic strategy, he added that while he disagreed with her plan, it was up to the British people.
Mr Biden also dismissed concerns about the strength of the dollar: “The problem is the lack of economic growth and sound policy in other countries.”
Questions still hang over the Government about whether it would be able to win enough support from a divided party for a series of painful decisions on tax and spending that have already prompted memories of the austerity era under David Cameron and George Osborne.
To embed this post, copy the code below on your site
have your say