“I think we’re underestimating the possibility that it’s all over, this government is already dead,” a Tory MP said.
London, Thanasis Gavos
The Prime Minister of the United Kingdom Liz Truss defended her government’s mini-budget, saying it “had to take decisive action” to boost growth despite heavy criticism, sterling’s slide, rising government bond yields, Bank of England emergency intervention and the international warnings about the British public finances and about the possible triggering of a global recession.
In a series of BBC regional radio interviews this morning Ms Truss repeated several times that “controversial and difficult decisions” were needed to improve the economic situation in the country.
“I’m prepared to do this as prime minister because it’s important to me to jumpstart our economy, to make sure that citizens can get through the winter and we’re willing to do whatever it takes to make that happen,” he said.
He was, however, accused by BBC Nottingham of acting as “reverse Robin Hood”, i.e. “taking from the poor and giving to the rich”, a reference to scrapping the top income tax rate and caps on bankers’ bonuses.
Asked by BBC Norfolk if she had any regrets about the mini-budget and if she thought her own assessment was better than the experts’ opinion, Liz Truss replied that “this is the right plan” and that “there will always be people who disagree”. .
He gave the same answer to BBC Kent’s question if he is “ashamed” of the economic measures that have caused so much disruption. He rejected the claim that the country is in crisis. Accused by the BBC Bristol presenter of giving everyone “the same scripted answers” about global challenges, she mockingly asked her if it was Putin’s fault that the Bank of England stepped in yesterday to buy 65 billion pounds government bonds, while warning of a “material risk” to the UK’s public finances.
Reactions against the government’s economic measures are increasing and intensifying outside and within the Conservative Party.
Today’s Economist front page shows Ms Truss and Finance Minister Kwasi Kwarteng in a sinking boat with the headline being ‘How not to rule a country’.
The former governor of the Bank of England Mark Carney accused the government of “undermining” some of the country’s economic institutions. He was particular about the fact that the government did not allow the independent Office for Budget Responsibility to accompany the mini-budget with an analysis of the fiscal implications, as happens in similar cases. As Mr Carney said, this heightened market concerns.
The main opposition Labor leader Sir Keir Starmer has called for an emergency reconvening of the House of Commons, which is closed until October 11 for party conferences.
The motion was backed by Liberal Democrat leader Sir Ed Davey, adding that the economic measures should be scrapped.
Even the well-known economist Gerard Lyons, who advises the government and is described as “Liz Truss’s favorite economist”, said Mr Kwarteng focused on satisfying citizens and businesses and underestimated the reaction of the markets. He even revealed that he had warned the leading political duo about market reactions just days before the mini-budget.
For the time being, Mr. Kwarteng receives the most criticism, with intense discussion about his possible replacement.
A former Conservative minister who attended a meeting with him on Tuesday told the Telegraph that the minister appeared “like a mole who came out of the earth amazed at what is happening”.
Another former ruling party minister spoke of a “really sad day” for the Tories, accusing the prime minister and minister of “cowboy” economic policies. As he added, “they naively believe that the ideology of student politics can seamlessly be transferred to the real world.”
Conservative MP Simon Hoare tweeted that the current predicament is the signature of the Government and the Treasury, adding in a visibly angry tone: “This incompetent madness cannot continue.”
Former minister Julian Smith, who backed Rishi Sunak in the race to succeed Boris Johnson, also tweeted that changes must be made to the government’s economic plan, otherwise all it will achieve is continued anxiety for citizens.
MP Robert Lagan called the scrapping of the top rate a “mistake”, while Mel Stride, the Tory head of the Parliamentary Economic Affairs Committee, warned that the resulting financial crisis could lead to a political crisis.
According to the Guardian, privately some Conservative MPs argue that only the cancellation of the mini-budget and the expulsion of Kwasi Kwarteng could save the party. “They are destroying the economy and it will take someone to blame,” said one of the MPs, referring to Ms Trass.
A colleague added: “We are talking about a disaster. It’s like (the financial crisis of) 2008 but worse. We play with the fundamental principle of providing a home for the citizen’s family. That’s why it’s different, it’s something real. The public will neither forgive nor forget.” This is a reference to fears about the impact of expected higher interest rates on the housing market, while the phrase “don’t forget, don’t forgive” was used by Keir Starmer in his Labor conference speech yesterday.
Another Tory MP appeared utterly disappointed, telling the Guardian that the markets had completely lost faith in this government. “I think we underestimate the possibility that it’s all over, this government should already be dead,” he said, while another colleague of his predicted that the fall of the government will begin with the dismissal of the Minister of Finance.
Former Tory Chancellor of the Exchequer and senior party figure Ken Clarke called it a “disastrous start” but said “we can’t have a different Chancellor of the Exchequer every week”.
Tax cuts and emergency aid to citizens and businesses through government borrowing were defended by Deputy Finance Minister Chris Phillips, saying they were a “plan to grow the economy”.
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