Mini-Budget market meltdown: PM defends her economic agenda

By Imogen Shaw

Following a day of combative interviews with regional BBC radio interviewers, Prime Minister Liz Truss has rounded off a politically bruising few days with continued assurances that the government’s plan for economic growth is the right one. 

In the week since her Chancellor Kwasi Kwarteng’s tax-cutting ‘mini-Budget’ threw the markets into turmoil, sending the pound tumbling and increasing the cost of government debt, this marks the first time she has spoken to the public. Truss took the opportunity to deny that a U-turn is on the cards, standing by the political programme on which she campaigned for Conservative Party leadership. Despite calls to move forward the next fiscal event planned for 23 November and pressure from Labour leader Keir Starmer to recall Parliament, there no indication that she will change course. 

The PM claims that she has taken “controversial, difficult decisions” but that she is “prepared to do that as Prime Minister because what’s important to me is that we get our economy moving.” She and her newly appointed Financial Secretary to the Treasury, Andrew Griffith, have both refuted claims that the mini-Budget is responsible for the current market turmoil, attributing it instead to the global pressures caused by Russia’s invasion of Ukraine. 

Truss’ round of interviews come after the Bank of England took emergency action in the form of a £65 billion bond-buying programme on Wednesday to stabilise UK financial markets and avert a crisis which risked draining pension funds of cash, putting them at risk of insolvency. One of the most striking moments from today’s media round came in Truss’ interview with BBC Bristol, when she was asked by presenter James Hanson whether she could guarantee to listeners that their pensions were safe. She stopped short of making any guarantee, instead praising the Bank of England for their role in delivering financial stability. 

In what has been an extraordinary week for politics and for the UK economy, Truss’s interventions today have not been enough to reassure the markets. Her economic programme has attracted intense criticism from both political opponents and concerned Conservatives.  

After the IMF urged the government to reconsider the scale of tax cuts funded by borrowing, Keir Starmer criticised the economic fallout from the ‘mini-Budget’ as a “self-inflicted” problem. 

Starmer told LBC: “The IMF statement is very serious and it shows just what a mess the government have made of the economy…At the moment they are saying they might be doing something in November. That’s far too long. They’ve got to review the plans they put out on Friday. They’ve got to do it urgently, in my view.” 

Former Conservative Chancellor Lord Ken Clarke, speaking to Times Radio today, echoed this call for urgent action to reassure the financial markets. He also claimed that “no Conservative government in my lifetime would ever have made a mistake of this kind”, claiming that the current Government is risking the Conservative Party’s reputation for economic competence. 

His concerns appear to being borne out in the polls, with Labour today polling a record 33 points ahead of the Conservatives, according to YouGov – the highest the party has ever recorded in any published poll since the 1990s. Time will tell if the extreme reaction to last week’s fiscal event will lead the Government to back-track on elements of its economic programme. It is already clear that the events of the last week have reshaped UK politics, and have the potential to do so for years to come.