Truss and Kwarteng meet UK budget watchdog, stick to tentative schedule

LONDON, Sept 30 (Reuters) – British Prime Minister Liz Truss and her finance minister Kwasi Kwarteng on Friday refused to comply with demands for an early forecast of the government’s growth plans and the impact of cuts to be published. planned taxes that caused turmoil in financial markets. markets.

Kwarteng unveiled a series of tax cuts last week that were, unusually, not accompanied by forecasts from the Office for Budget Responsibility (OBR). A resulting sell-off led the Bank of England to step in with emergency bond purchases to protect pension funds from a partial collapse.

Kwarteng came under pressure to allay market fears and deliver a budget statement due November 23, when he said he would release the OBR’s forecast and detail the costs of debt-funded tax cuts. as well as a way to reduce the debt in the medium term.

However, after Truss and Kwarteng met OBR chairman Richard Hughes on Friday, the finance ministry said the timing of Kwarteng’s “medium-term budget plan” was unchanged.

“They discussed the process for the upcoming economic and fiscal forecasts, which will be released on November 23, and the economic and fiscal outlook,” the Treasury said in a statement.

“They agreed, as usual, to work closely together throughout the forecasting process and beyond.”

The OBR said the first draft would be delivered to Kwarteng on October 7 and would be “as always, based on our independent judgment on the economic and fiscal outlook and the impact of government policies”.

The watchdog said on Thursday it had offered to produce an analysis of Kwarteng’s tax cut plan, but had not been commissioned to do so.

A top parliamentary committee has joined those urging Kwarteng to deliver his November statement to calm markets, echoing calls from other lawmakers in the ruling Conservative Party. Read more

Andrew Griffith, the minister who oversees the City of London’s financial district, said earlier the projections should not be rushed.

“We all want the forecasts to be (done) as quickly as they can (OBR), but also…you also want them to have the right level of detail,” he told Sky News .

LATTICE NOT FOR U-TURN

Truss, who only replaced Boris Johnson as prime minister this month, argued that the market turmoil is the result of global problems caused by Russia’s invasion of Ukraine, and that it is will stick to his plan to pull the economy out of years of stagnation. growth.

She also says the government has had to step in to help people and businesses pay their energy bills, a package the government says will cost around 60 billion pounds ($66 billion) over the next six months. , in order to maintain the income of a typical household. bills less than 2,500 pounds per year.

Official data showed on Friday that Britain’s economy grew in the second quarter but was still below its pre-pandemic peak. Read more

Critics say Truss and Kwarteng should have included the OBR forecast to reassure markets about where the funding was coming from before announcing their proposed £45billion tax cuts.

The International Monetary Fund has slammed the plans, saying they would increase inequality in Britain, major investors have warned the country’s credibility is at stake, and US Trade Secretary Gina Raimondo and her European allies have expressed their discomfort.

“I’m not worried about the euro but I’m worried about the situation in Britain,” French Finance Minister Bruno Le Maire said on Friday. Read more

Polls indicate that the public is also unimpressed with the government’s proposals.

Some conservative lawmakers have said Truss needs to rethink his plans.

“It’s really, really bad. There’s no way to disguise it as anything other than being quite upsetting,” lawmaker Charles Walker told The Times radio. “It’s been very poorly handled, and we need to start handling it better.”

($1 = 0.9037 pounds)

Additional reporting by Kylie MacLellan; Written by Michael Holden; Editing by Frank Jack Daniel

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