LONDON (AP) – Britain’s Treasury chief has rejected suggestions that the Conservative government would reverse course on economic plans that have roiled financial markets even after Prime Minister Liz Truss faced widespread criticism from her own lawmakers during a closed-door meeting.
Treasury chief Kwasi Kwarteng on Thursday flatly ruled out a U-turn on the government’s economic growth plan, despite investor concerns that 45 billion pounds ($50 billion) of unfunded tax cuts will push public borrowing in Britain to unsustainable levels and fuel inflation. Kwarteng announced the plans three weeks ago when he delivered a “mini-budget” to the House of Commons.
“Our position hasn’t changed,” Kwarteng told the BBC in Washington, where he is attending the International Monetary Fund’s annual meeting. “What I’m totally focused on is delivering on the mini-budget.”
The comments came after Conservative Party lawmakers blasted Truss on Wednesday evening for pursuing a strategy they said benefits the wealthy at the expense of the working class voters who handed the party a landslide victory in 2019. Truss has “trashed the last 10 years of workers’ Conservatism,” British news organizations quoted Robert Halfon, chairman of the House of Commons Education Committee, as saying.
The government argues that the proposed tax cuts will stimulate economic growth, which will in turn generate increased tax revenues to pay for public services.
But investors are concerned because Truss’ Conservative government hasn’t provided any independent analysis on how the plan will affect borrowing and debt levels.
That sent the pound plunging to a record low against the dollar on Sept. 26, although it has since recovered. The Bank of England has stepped in to stabilize the bond market after sharp increases in bond yields threatened some pension funds. Rising interest rates are also squeezing borrowers, making it more difficult for people to buy home and refinance mortgages.
Under pressure to stabilize financial markets, Kwarteng said earlier this week that he would release further details on the government’s economic plan and its impact on public finances by the end of this month.
That’s three weeks earlier than planned.
Earlier, Foreign Secretary James Cleverly rejected suggestions that Truss should step down.
“I think that changing the leadership would be a disastrously bad idea, not just politically but also economically,” Cleverly told the BBC. “And we are absolutely going to stay focused on growing the economy.”