The British prime minister said growing the economy and dealing with inflation “means taking controversial and difficult decisions”. Source: Rory Arnold / No 10 Downing Street, Flickr.
After chaos in financial markets, UK prime minister Liz Truss has defended her government’s economic plan in a round of interviews.
Truss said she would not change policy despite the Bank of England needing to take emergency action over concerns that chancellor Kwasi Kwarteng’s mini budget threatened the financial health of pensions and insurance companies.
The Bank will set aside £65 billion to buy bonds over the next 13 working days to ease the pressure felt by pension funds and insurance companies.
The Bank said it is “monitoring developments in financial markets very closely in light of the significant repricing of UK and global financial assets”.
“This repricing has become more significant in the past day – and it is particularly affecting long-dated UK government debt. Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability.”
Truss won the leadership of the governing Conservative Party and became prime minister in early September with the promise of tax cuts.
“We had to take urgent action to get our economy growing, get Britain moving, and also deal with inflation, and of course, that means taking controversial and difficult decisions,” Truss said.
“But I’m prepared to do that as prime minister because what’s important to me is that we get our economy moving.”
In her interviews with BBC local radio stations, Truss insisted her government’s policy which has cut taxes primarily for richer people and caused the decline in the pound, remains the right course of action and would benefit people in the longer term.
“Of course, some of these decisions are difficult,” she said on BBC Radio Lancashire.
“Some people don’t like them. But what I couldn’t do is allow the situation to drift. So that is why my government has taken urgent action.”
The shadow chancellor, Rachel Reeves, urged the prime minister to recall parliament to reverse what she called the “kamikaze budget”.
“This is a serious situation made in Downing Street and is the direct result of the Conservative government’s reckless actions,” she said.
“If the prime minister continues to prioritise saving her face over saving people’s homes, Tory MPs must join Labour in calling for parliament to be recalled so this kamikaze budget can be reversed.”
Liz Truss is facing increasing pressure from Tory MPs to make changes and there have been calls to sack Kwarteng. A recent YouGov poll put Labour a record 33 points ahead and only 37 per cent of 2019 Tory voters said they would vote for the Conservatives now.
