Truss admits mini-budget caused disruption, but says there is ‘clear plan’

theguardian.com:

Liz Truss has admitted that the mini-budget delivered by her government last week did cause “disruption”, after it was followed by a series of economic shocks, including the pound falling to an all-time low against the dollar.

The prime minister said the government had a “clear plan” and acknowledged that the policies may be unpopular.

Announcements by Kwasi Kwarteng a week ago included a cut in income tax from 45p to 40p in the pound for the highest earners. Other taxpayers received a 1p cut in income tax and will get money from a U-turn in the rise in national insurance. The chancellor said they would all help to increase growth.

However, there was a strong market reaction to the package, which amounted to the biggest tax cuts in 50 years. The Bank of England subsequently spent billions of pounds buying government debt to shore up pensions schemes. It has also indicated that interest rates are like to rise significantly, which has led to jumps in mortgage rates and lenders pulling many deals.

Writing in the Sun, Truss failed to address the changes to the 45p rate, or the scrapping of bankers’ bonuses, which was also included in Kwarteng’s announcements. She said: “For too long we have been stuck debating how to divide up the economic pie, rather than grow the pie so everyone has a bigger slice.

“The status quo is not working. For too long we have been held back by low growth and high taxes. We need to get things done in this country more quickly.

“So I am going to do things differently. It involves difficult decisions and does involve disruption in the short term.

“Not everyone will like what we are doing, but I want to reassure the public that the government has a clear plan that I believe is right for the country.”

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