How Kwasi Kwarteng’s budget-busting growth plan turned into week from hell
When Kwasi Kwarteng claimed his budget-busting plan for growth would usher in a “new era”, it is unlikely he had in mind a sterling crash, rocketing mortgage rates and a 33-point poll lead for Keir Starmer.
But over seven nerve-shredding days, Kwarteng and Liz Truss’s bold economic experiment, hailed with glee by the free market thinktanks, has been comprehensively trashed.
After Friday’s historic statement, Kwarteng was sufficiently relaxed to take his advisers to a Whitehall pub, posing for selfies with the landlady. By the end of this week, he was scrambling to find spending cuts to make his sums add up in the face of soaring borrowing costs, while telling reporters, “we are sticking to the growth plan”.
Kwarteng’s aides insist he remained consistently calm as his cherished plan was given a kicking by the markets. But as the Conservatives’ party conference kicks off in Birmingham this weekend, many of the chancellor’s colleagues are anything but relaxed.
Much of last Friday’s plan consisted of policies heavily trailed in Liz Truss’s leadership campaign. But the pair chose to throw in more costly and contentious measures, including scrapping the 45p top rate and uncapping bankers’ bonuses.
In total, it was the biggest tax-cutting package for 50 years, and came on top of the radical energy price guarantee: the emergency response to gas prices sent rocketing by Russia’s invasion of Ukraine, which Kwarteng and Truss had chosen to fund entirely through borrowing, and could cost up to £150bn.
Investors hoping to look under the bonnet of this “new era” were denied independent forecasts from the Office for Budget Responsibility (OBR), while Kwarteng made clear his disdain for “Treasury orthodoxy” – underlined by the sacking of the
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