Market turmoil

Budget forecast next week, Ross demands change

Kwasi Kwarteng
Kwasi Kwarteng delivered his Fiscal Event without independent advice

A crucial forecast on the UK Government’s controversial mini-budget has been brought forward to next week as the Prime Minister and Chancellor have been forced to respond more quickly to panic in the financial markets.

Liz Truss and Kwasi Kwarteng met the Office for Budget Responsibility’s chairman Richard Hughes today ahead of receiving a draft of its assessment of their tax-cutting plans, which will be published on 7 October ahead of the full economic and fiscal forecast on 23 November.

The Treasury Select Committee said the lack of this forecast before last Friday’s mini-budget had “in some part driven the lack of confidence in the markets”.

As the OBR confirmed it had tried and failed to give advice to the government ahead of the Chancellor’s statement, both the PM and the Chancellor have insisted their strategy is the right one to stimulate growth even though it caused the pound to fall to a record low against the dollar, prompting intervention by the Bank of England. Interest rates are now expected to rocket.

Sterling continued to rebound today after the week’s events and was heading for its best week since the end of 2020.

Conservative backbenchers will be relieved that a proper assessment of how the government plans to finance its plans will be delivered sooner than the end of November.

Their concerns have intensified after a YouGov poll showed Labour opening up a massive 33-point lead – thought to be the biggest lead by any party in any poll since the 1990s.

The OBR acts as a watchdog on government debt, giving an assessment of the likely impact of what ministers are planning to do.

Ministers are drawing up plans for real-terms benefits cuts, saving £5 billion by increasing them in line with earnings, rather than with inflation.

Ms Truss was warned by analysts that she would have to make cuts on the scale of former Chancellor George Osborne’s 2010 austerity budget to balance the books by the second half of the decade.

Scottish Conservatives leader Douglas Ross has advised Mr Kwarteng to make changes to his mini-budget.

He said that Rishi Sunak, the former Chancellor and defeated Tory leadership candidate, had been proved right about the impact of Ms Truss’s policies on the economy.

“We’ve seen what Rishi said during the campaign and he predicted a lot of what has happened,” he said.

“Rishi has not said much in the last week but clearly there was a difference of opinion between Rishi and Liz over the course of the entire election campaign.”

See also: Sturgeon insists she will not emulate Kwarteng’s policies

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