Truss and Kwarteng to meet OBR amid market turmoil
Liz Truss and Kwasi Kwarteng will meet the head of the Office of Budget Responsibility on Friday, in the couple’s latest effort to reassure markets and voters that the economic turmoil of recent days is under control.
Treasury and Downing Street sources have hit back at suggestions it was an emergency meeting, but it comes after days of financial market chaos and fears of a spike in mortgage bills sparked by the chancellor’s mini-budget last week.
In a move nonetheless unusual for a prime minister, Ms Truss will join Mr Kwarteng in meeting Richard Hughes, the head of the independent spending watchdog pushed to the fore amid the political and economic fallout from the government’s mini-budget. Friday.
Treasury Select Committee Chairman Mel Stride, one of a growing Tory caucus concerned about the Government’s plans, urged the meeting to be a ‘time to reset’, echoing earlier calls from fellow Tory MPs for a government’s “plan B”. .
Mr Stride was also among those who asked Mr Kwarteng to deliver his planned statement outlining how he intends to get public finances back on track after the OBR said it could produce a preliminary set of forecasts for here October 7th.
The Chancellor is currently due to present his medium-term budget plan outlining how he would lower debt as a percentage of GDP, alongside the OBR’s updated forecast on November 23.
It comes as a YouGov poll for The Times showed Labor had opened up a whopping 33 point lead over the Tories, raising new questions about Ms Truss’ leadership just weeks into her job.
Sir Charles Walker, a Tory MP commenting on the poll, admitted his party could be “wiped out” if an election is called tomorrow.
Former Cabinet Minister Julian Smith also urged the government to backtrack on cutting the top tax rate, saying it must “take responsibility” for the reaction to Friday’s mini-budget.
And while declining to comment directly on the economic turmoil created by the mini-budget, Ms Truss said in a series of BBC local radio interviews that her administration needed to take ‘urgent action’ to revive the economy and protect consumers from rising energy costs. .
During a visit to an engine factory in Darlington, Mr Kwarteng said the package he announced in the Commons on Friday was “absolutely essential” if the economy was to generate the revenue needed to fund public services.
The lack of such a forecast had been one of the issues that would have troubled the city after the Chancellor’s announcement.
In a letter to the leader of the Scottish National Party in Westminster, Ian Blackford, and the party’s shadow chancellor, Alison Thewliss, Mr Hughes confirmed that the body had sent “a draft economic and fiscal forecast to the new chancellor on September 6, his first day in office.
He wrote: “We proposed, at the time, to update this forecast to take into account subsequent data and to reflect the economic and fiscal impact of any policies announced by the government in time for them to be published. along with the “tax event”.
He said the OBR had not been mandated to produce an updated forecast, but confirmed that it would have been “able to do so to a level that meets the legal requirements of the Fiscal Responsibility Charter”.
Mr Blackford called the details in the letter “utterly damning”.
“Of course, that means making controversial and difficult decisions, but I’m ready to do that.”
The comments came after the Bank launched an emergency government bond buying program on Wednesday to prevent borrowing costs from spiraling out of control and avert a “significant risk to the financial stability of the UK”. .
He bought up to £65billion of government bonds – known as gilts – at an ‘urgent pace’ after fears over the government’s tax cut plans sent the market plummeting. pound and triggered a sell-off in the gilt market, which left the UK’s pension fund on the brink.
On Thursday, the pound regained ground, moving above $1.1 for the first time since last Friday.
However, the FTSE 100 fell around 2% to 6,864 – its lowest point since March this year, amid a global selloff, while yields on UK 10-year gilts rose to 4, 14%.
Speaking in Northern Ireland, the Bank’s chief economist, Huw Pill, highlighted warnings that they would have to raise interest rates sharply, noting that there was “undoubtedly a specific component to the UK” in recent market movements.
Her comments contrasted with Ms Truss who in her interviews blamed “Vladimir Putin’s war in Ukraine” for driving up global energy prices.
Earlier, unions had called for an ‘iron guarantee’ that there would be no further public spending cuts after Chief Treasury Secretary Chris Philp confirmed that departments in Whitehall had been tasked with carrying out a ‘ efficiency and prioritization exercise” with the aim of finding savings.
Speaking to broadcasters, Mr Kwarteng said that despite pressure on public finances the government would maintain the ‘triple lock’ of state pensions, but refused to commit to increasing benefits depending on the inflation.
“It’s premature for me to make a decision on this, but we are absolutely focused on protecting the most vulnerable in our society through what could be a challenge,” he said.
It comes amid some speculation that the government could switch to increasing earnings-related benefits instead of inflation next year, in a bid to save billions of pounds.
Ms Truss can still count on some support for the measures, particularly among the liberal wing of her party.
Writing in the Telegraph, Lord Frost dismissed those who attached importance to ‘symbols like the value of sterling’, while Tory MP Daniel Kawczynski praised the Prime Minister’s ‘radical’ approach to avoid a recession.
Meanwhile, Kemi Badenoch, the international trade secretary, faced awkward questions during her visit to New York as she sought to promote British businesses to American investors.
Appearing on Bloomberg TV, she insisted those she met still had faith in the UK.
“Now is the time to invest in the UK,” she said.