LONDON: UK Prime Minister Liz Truss (pix) on Thursday (Sept 29) defended her tax-slashing plans but vowed to “get borrowing back on track”, after nearly a week of silence when markets tanked and the Bank of England (BoE) was forced into an emergency intervention.
“We had to take urgent action to get our economy growing, get Britain moving, and also deal with inflation,” she said in an initial round of local BBC radio interviews.
“And of course, that means taking controversial and difficult decisions, but I’m prepared to do that as prime minister,” she added, in her first comments to UK media since the crisis sparked by Friday’s “mini-budget”.
“It’s important the United Kingdom’s on the front foot, that we are pulling all the levers we can to drive economic growth. That is what we are pushing ahead with.”
In a series of further BBC regional television interviews, Truss – in power for less than a month – said some aspects of her growth plan “will take time” while insisting “we will get borrowing back on track”.
The under-fire leader is facing severe pressure after the markets reacted to her government's contentious plans for extra borrowing to fund uncosted tax cuts by sending the pound to an all-time low against the dollar.
UK markets remain highly volatile, with the central bank intervening on Wednesday to buy government bonds in order to prevent a “material risk” to stability.
The Bank of England announced a two-week programme to buy long-term UK bonds, capped initially at £65 billion (RM326 billion), as UK pension funds scrambled to sell investments in order to remain solvent.
After sterling hit its dollar low early Monday, the bank said it would “not hesitate to change interest rates by as much as needed” to curb high inflation.
But it also signalled that it would wait until its next policy meeting on Nov 3 before fully assessing the impact of the government's contentious plans.
Parliament's Treasury Committee on Thursday called on Chancellor Kwasi Kwarteng directly to publish a fully costed economic forecast by the end of October to help the bank rather than on Nov 23 as planned.
Opposition leaders have demanded that Truss cancel her Conservative party's annual conference starting on Sunday and recall parliament over the crisis.
Markets are concerned that Britain cannot fund its huge spending commitments, having announced a massive fuel subsidy package alongside the tax cuts.
Truss defended her fiscal policy, which includes a cut to the top rate of income tax, arguing the UK currently had its highest tax burden in 70 years.
“We’ve reduced those taxes across the board. And of course people who are better off tend to pay more taxes,” she said.
The pound rebounded somewhat during Thursday, rising 1% against the dollar and reaching US$1.09, reversing losses the previous day following the BoE's emergency move.
But former BoE chief Mark Carney said the government had “undercut” financial institutions with its actions.
“Unfortunately having a partial budget, in these circumstances – tough global economy, tough financial market position, working at cross-purposes with the bank – has led to quite dramatic moves in financial markets,” he told the BBC.
But Truss insisted she was working “very closely” with the central bank.
Truss and Kwarteng will meet the head of the country's independent fiscal watchdog today (Sept 30). They will meet Richard Hughes, chair of the Office for Budget Responsibility (OBR), to discuss the budget forecast process and economic and fiscal developments since March, the UK's Treasury said on Thursday. – AFP, Reuters
