Truss apologises for 'mistakes' after budget U-turn

Truss apologises for ‘mistakes’ after budget U-turn

British Prime Minister Liz Truss has apologised for her “mistakes” and pledged to lead the Tories into the next general election as she fought for her job after her tax-cutting plans were scrapped.

Ms Truss said she has “adjusted what we’re doing” after her government’s fiscal policies spooked the markets, putting in place a new chancellor with a fresh strategy to “restore economic stability”.

“I do think it is the mark of an honest politician who does say, yes, I’ve made a mistake,” she said.

The prime minister is battling to save her premiership after her economic agenda was left in tatters by the dismantling of her former chancellor’s landmark mini-budget.

Speaking after new Chancellor Jeremy Hunt scaled back the energy support package and ditched “almost all” the tax cuts announced by his predecessor, Ms Truss said she wanted to “accept responsibility and say sorry for the mistakes that have been made”.

“I wanted to act… to help people with their energy bills to deal with the issue of high taxes, but we went too far and too fast. I’ve acknowledged that,” she told the BBC.

She said she is “sticking around” because she was “elected to deliver for this country”, adding: “I will lead the Conservatives into the next general election.”

The pressure on Ms Truss gained traction this evening with five Conservative MPs now openly calling for her to go after just six weeks in power.

Charles Walker was the latest to make the case for her exit.

He told Sky News: “I think her position is untenable. She has put colleagues, the country, through a huge amount of unnecessary pain and upset and worry.”

The situation “can only be remedied” with “a new prime minister”, he said.

Earlier, Ms Truss’s press secretary said there had been no point today when Ms Truss thought her time was up.

Conservative Party chairman Jake Berry said there had been a focus on “unity” as Ms Truss addressed a gathering of the One Nation group of Tory MPs in Westminster.

He said she had been “exceptional” and he had not heard any irritation towards her in the meeting, although it was still going on.

Hunt reverses UK mini-budget in dramatic U-turn

Earlier today, new British Chancellor Jeremy Hunt scrapped Liz Truss’s economic plan and scaled back her vast energy subsidy, launching one of the biggest fiscal policy U-turns in the country’s history.

He was charged with stemming a dramatic loss of investor confidence and halting a bond market rout, triggered by the government’s announcement on 23 September of huge unfunded tax cuts.

Mr Hunt reversed all the policies that helped Ms Truss become Conservative Party leader and premier less than six weeks ago.

Ms Truss’s spokesperson denied today that Mr Hunt was running the country after his new strategy of also cutting spending sent the pound soaring against the dollar and helped government bond prices start to recover from a three-week pounding.

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“A central responsibility for any government is to do what is necessary for economic stability,” Mr Hunt said in a televised statement, adding that he would “reverse almost all the tax measures announced in the growth plan three weeks ago”.

Mr Hunt said in the House of Commons this afternoon that the government would take decisions of “eye-watering” difficulty to ensure trust and confidence are restored in the country’s finances.

“We are a country that funds our promises and pays our debts and when that is questioned, as it has been, this government will take difficult decisions necessary to ensure there is trust and confidence in our national finances,” Mr Hunt said.

The former foreign and health minister was appointed on Friday after Ms Truss sacked Kwasi Kwarteng, her close ally.

Under the new financial policy, most of Ms Truss’s £45 billion of unfunded tax cuts will go and a two-year energy support scheme for households and businesses – expected to cost well over £100 billion – will now be curtailed in April.

A review after that will set out a targeted scheme that will “cost the taxpayer significantly less than planned”.

Mr Hunt said halting the planned tax cuts would raise £32 billion every year. The pound soared by as much as 1.5% to $1.1338 shortly after 2.30pm.

Economists said the measures would not plug the gap in the public finances or undo the damage done by the government’s radical policy, but were a move in the right direction.

“We have taken action to chart a new course for growth that supports and delivers for people across the United Kingdom,” Ms Truss said on Twitter.

The prime minister did not initially attend parliament today, while Penny Mordaunt answered questions from MPs on her behalf. She later appeared during Mr Hunt’s statement to the House of Commons, before leaving the chamber again.

Ms Mordaunt had earlier said the prime minister was in “wall-to-wall meetings” and told MPs Ms Truss had a genuine reason for being absent but “I can’t disclose the reasons”.

Fighting for survival

Britain’s latest crisis started on 23 September, when the newly appointed Ms Truss and her then-finance minister Mr Kwarteng unveiled £45 billion of unfunded tax cuts to snap the economy out of years of stagnation.

They argued that a huge increase in spending during the Covid-19 pandemic had set Britain’s tax take on course to reach its highest level since the 1950s.

But the response from bond investors who would fund the tax cuts was violently negative and borrowing costs surged. Lenders pulled mortgage offers and the Bank of England eventually had to step in to stop pension funds going under.

After scrapping one of the tax cuts, Ms Truss fired Mr Kwarteng on Friday, saying she accepted her plans had gone “further and faster” than investors were expecting.

Mr Hunt then had the weekend to ditch the rest and start reviewing spending to appease the markets and prevent borrowing costs from rising further. Adding to the pressure, the Bank of England stuck to its plan to end emergency support on Friday.

Gilts rallied today but the damage endures, with the yield on the 10-year bond still some 46 basis points above its closing level on 22 September. While yields for comparable German and US bonds have increased over the same period, the hit to British debt remains especially severe.

The Resolution Foundation think-tank said Britain was again embarked on a “tax raising economic agenda”, with typical households set to lose around £1,000 of income.

Asked at a daily briefing how the prime minister could retain any credibility after forsaking the policy that secured her election by party members, Ms Truss’s spokesman said she was listening to the public, her colleagues and to the markets.

“She is making the necessary difficult decisions to change our approach so we can provide the economic stability and maintain that stability of leadership which is important as well,” he said.

Ms Truss’s about-turn has angered Conservative MPs who supported her and encouraged those who opposed her to try to find a way of removing her from power. Some have already said she must go and the opposition Labour Party has called for an election.

The fourth British prime minister in six years, Ms Truss was only formally appointed to the role on 6 September.

Additional reporting: Reuters

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