Kwasi Kwarteng has promised that frontrunner Liz Truss will be a ‘fiscally responsible’ Prime Minister if she is named as Prime Minister today.
Writing in the Financial Times, Kwarteng, who has been tipped to be Chancellor of the Exchequer, moved to calm fears in financial markets over the impact of Liz Truss’s policies.
Kwarteng said that the new administration would act in a “fiscally responsible way”.
Kwarteng said that Britain could afford to borrow more – pointing out that only Germany has a lower ratio of debt to GDP among G7 nations.
Tax cuts and UK inflation
He wrote, “Liz will take immediate action if elected that will help people with the challenges we face in the coming months, and lay the groundwork for the change we need in the long term.
“This means cutting taxes, putting money back into people’s pockets and unshackling our businesses from burdensome taxes and unsuitable regulations.
“Given the severity of the crisis we face, there will need to be some fiscal loosening to help people through the winter. That is absolutely the right thing to do in these exceptionally difficult times.”
Rishi Sunak has warned that Liz Truss’s policies could “pour fuel on the fire” of inflation.
‘Fuel on the fire’
Last month, Goldman Sachs warned that Inflation could hit 22.4% in 2023 if prices for natural gas remain as high as they currently are.
The Bank of England’s Monetary Policy Committee is due to have its next interest rate meeting on September 15.
The National Institute of Economic and Social Research warned last month that the Bank of England would need to raise interest rates to 3% to bring down inflation.
Another 21 economists suggested that the bank would raise interest rates by 0.25% in September – after a 0.5% raise in August.
British consumer price inflation rose to 10.1% in July, up from 9.4% in June, in the highest figure since February 1982, according to the Office of National Statistics.