Liz Truss says her government has “done the right thing” in its mini-budget in order to get the economy growing.
Speaking to the BBC in a raft of local radio interviews this morning, the prime minister said “urgent action”, along with “controversial and difficult decisions”, needed to be taken to improve the situation in the UK.
She said she was “prepared to do that… because what is important to me is we get our economy moving, we make sure that people are able to get through this winter and we are prepared to do what it takes to make that happen”.
Markets were thrown into turmoil after the government announced its mini-budget on Friday, which included a swathe of tax cuts – such as scrapping the 45p top rate, reversing the National Insurance rise and cancelling an increase to corporation tax.
Economists feared the amount of borrowing needed to pay for the policies and, as a result, the pound plummeted.
The Bank of England was forced to intervene to stop some pension funds collapsing by launching a temporary bond-buying programme as an emergency measure to prevent “material risk” to UK financial stability.
Yet, speaking in public for the first time since the fall-out, Ms Truss still said the government had “done the right thing by taking action urgently”, despite the trouble that has followed, and she still believed in “sound money”.
She said the Treasury was “working closely” with the Bank of England, reiterating its independence, but claimed there were “difficult markets around the world” due to the war in Ukraine and the problem in the UK was not homegrown.
But while the PM kept saying the “biggest part” of the government’s interventions was on the energy bills – introducing a cap on the average bill of £2,500 and equivalent help for businesses – this was announced over a week before the mini-budget and not thought to be the main reason for the market’s reaction.
Earlier, Chief Secretary to the Treasury Chris Philp admitted scrapping the top tax rate would only benefit the most wealthy in the country.
But questioned on whether that policy and others were fair to the wider public, the PM said: “The reality is having lower taxes across the board… helps everybody because it helps grow the economy and for too long the debate in this country has been about distribution, not how we grow our economy.
“It is not fair to have a recession, it is not fair to have a town where you are not getting the investment, it is not fair if we don’t get high paying jobs in the future because we have got the highest tax burden in 70 years. That’s what is not fair.”
‘Sort this mess out’
The government is facing demands from opposition parties to recall parliament from its conference recess to deal with the economic problems.
At the end of his party’s conference on Wednesday, the Labour leader Sir Keir Starmer called on Mr Kwarteng to reverse Friday’s announcements “before any more damage is done”, telling Sky News that Ms Truss was a “danger” to the economy.
And this morning, Liberal Democrat leader Sir Ed Davey told Sky News: “Liz Truss, Kwasi Kwarteng and the rest of this amateur bunch need to get back to their offices, stop their conference and sort this mess out – come to parliament and be held accountable.”
The Conservative Party conference is due to kick off on Saturday in Birmingham, but could be a tense affair, with several Tory MPs criticising its own government’s policies.
Several of the party’s big names, including former leadership contender and ex-Chancellor Rishi Sunak and previous Health Secretary Sajid Javid, are also thought not to be attending.