December 7, 2022

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Liz Truss says sorry, and faces major spending cuts to balance books

Liz Truss says sorry, and faces major spending cuts to balance books

  • Truss says she’s sorry for making mistakes
  • She says it’s “rolled up”
  • The economic agenda that caused the abolition of the market
  • Some Conservative MPs have called for her to resign

LONDON (Reuters) – Prime Minister Liz Truss has apologized for threatening Britain’s economic stability after she was forced to abandon her massive tax-cutting plans and embark on a “surprising” program to cut public spending instead.

After weeks of blaming markets and “global headwinds” for investors dumping sterling and government bonds, Truss said she regretted going “too far and too quickly” with her radical economic plan to pull Britain out of years of stagnant growth.

Markets, which slumped after their “small budget” on Sept. 23, remain under pressure even after Truss Finance Minister Jeremy Hunt tore up their plans on Monday and are now fighting for survival, just six weeks into her premiership.

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It was not clear if Truss’ apology would quell a growing rebellion in her ruling conservative party, with a few lawmakers urging her to resign. Dozens fear that they will lose their jobs in the upcoming elections.

Even one of her ministers said she could not afford to make more mistakes – something that could be difficult when her government is looking for deep savings that could deepen the expected recession. Already Hunt has refused to guarantee the budgets of departments such as health and defense.

A new opinion poll by YouGov shows that even members of the Conservative Party who have backed her for prime minister have other ideas. The report showed that more than half of the members polled said she should resign, while a third wanted her to be replaced by her predecessor, Boris Johnson.

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“I want to take responsibility and say sorry for the mistakes that were made,” Truss told the BBC late on Monday.

“I wanted to work to help people with their energy bills, to deal with the issue of high taxes, but we went too far and too quickly.” She added that she was “stumbling” and that she would lead the Conservatives to the next election due in about two years’ time, although the statement was accompanied by laughter.

Truss watched silently in Parliament on Monday as Hunt demolished the economic plan she had proposed less than a month ago, which sent the bond market crashing so deeply that the Bank of England had to act to prevent pension funds from collapsing.

“Prime Ghost”

For some in the party, the sight of the prime minister’s modest in Parliament did not give her much confidence in her ability to fight.

The Daily Mail, which praised Truss’s plan, published its front page as she left Parliament on Monday with the headline “In office but not in power”, while its backer The Sun newspaper called it “Ghost PM”.

James Hebei, the secretary of the armed forces, said Truss, his boss, could not afford to make more mistakes.

Truss held a meeting of her ministerial team on Tuesday and was scheduled to speak later to her deputies, who were urged by some close to the government to refrain from any move to oust her before the government presents its full financial plan on October 31. .

Truss was elected by members of the Conservative Party, not by the broader electorate, on the promise of tax cuts and regulation to ignite the economy in a policy that critics have dubbed a return to Thatcher economics modeled on Thatcherism.

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But the market reaction was so dramatic that borrowing costs rose, lenders withdrew mortgage offers and pension funds fell.

The Bank of England said a report in the Financial Times of a new delay to the start of its government bond sales was inaccurate. The Financial Times said it had learned that senior officials were likely to decide a delay was needed after judging the gold bond market as “extremely tired” in recent weeks.

Ryan Air (RYA.I) Michael O’Leary, chairman of the board, called Britain’s economic situation a “car accident” and blamed it on his country’s decision to vote to leave the European Union in 2016.

Spending amount

With Britain’s economic reputation shattered, Hunt may now have to go further in finding cuts to public spending than the government would have done had Cos unleashed its economic plan at a time of high inflation.

Torsten Bell, head of the Resolution Corporation, a think-tank, told BBC Radio that the government may need to find cuts in public spending of around 30 billion pounds ($34 billion) – a very difficult task politically after successive Conservative governments cut back. Departmental budgets throughout the year. the past ten years.

One area of ​​spending that should really start is Truss’ massive two-year energy support package that was expected to cost more than £100 billion.

Hunt said support for families and businesses would now run until April before it was revised, leading analysts to say families could face £5,000 energy bills next year.

On Monday, Hunt refused to guarantee past policies, such as a commitment to raise pensions in line with inflation.

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Writing by Kate Holton and Elizabeth Piper; Additional reporting by William James, Andrew McCaskill, Kylie McClellan and Paul Sandell; Editing by Raisa Kasulowski and Gareth Jones

Our criteria: Thomson Reuters Trust Principles.