Liz Truss’s ‘favourite’ economist says chancellor ‘took his eye off ball’ and ‘overstepped the mark’ with mini-budget
Prime Minister Liz Truss’s external adviser on the economy has told Sky News that the chancellor had “taken his eye off the ball” and “overstepped the mark” with his mini-budget.
Gerard Lyons, who is often referred to as Ms Truss’s ‘favourite’ economist, said Chancellor Kwasi Kwarteng failed to adequately prepare the financial markets ahead of his announcement.
Speaking on The Take With Sophy Ridge, Mr Lyons said: “The chancellor, whilst he had focused on the general public and on British businesses, he had not really prepared the financial markets fully.
“And I think he had taken his eye off the ball slightly, shall we say, in having not prepared the markets for what he was doing in the budget and I felt that he overstepped the mark last week.
“So it was a combination of all three factors – the febrile markets because of the global backdrop, the actions of the Bank of England last Thursday but let’s be in no doubt, it was primarily the mini-budget last Friday that triggered this latest series of events.”
Asked if he had had any conversations with Ms Truss or her team, Mr Lyons said he had “made my thoughts known”. He said he was “highlighting in my writing… about the febrile state of the markets and the need to keep the markets onside”.
Pushed on whether they had taken his advice, he said: “Well, sometimes people listen, sometimes they don’t, but there were positives that came out of it. But as we saw last Friday, there was just not enough in line with what the markets had been prepped for and were expecting.”
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Gerard Lyons: Mini budget not what the markets were expecting
Despite his remarks, Mr Lyons said the budget was “very positive in many respects”.
He said it was “very much on a pro-growth agenda” which was needed to “break out of this low-growth phrase”.
Mr Lyons’s remarks about the chancellor failing to prepare the financial markets were contrasted by a minister who told deputy political editor Sam Coates it was “bulls***t” to say market movement was related to the mini-budget announcement.
And on The Take with Sophy Ridge, chief secretary to the Treasury Chris Philp denied the government had any responsibility and said there would be no change of course.
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“Getting Britain’s economy growing is so important. Important to raise wages and important to pay the tax bills of the future,” he said.
Mr Philp suggested benefits may not be hiked in line with spiralling inflation. He said a commitment by former chancellor Rishi Sunak to uprate benefits in line with inflation was under consideration amid reports different government departments have been asked to draw up plans for efficiency savings.
Mr Philp told ITV’s Peston: “We are going to look for efficiencies wherever we can find them.”
But he said the Treasury would not commit to an expected uprating of benefits in line with inflation.
Pressed about the decision, he said: “I am not going to make policy commitments on live TV, it is going to be considered in the normal way, we will make a decision and it will be announced I am sure in the first instance to the House of Commons.”
On Wednesday the Bank of England was forced to launch an emergency government bond-buying programme to prevent borrowing costs from spiralling out of control and stave off a “material risk to UK financial stability”.
The Bank will buy as many long-dated government bonds as needed between now and 14 October in a bid to stabilise financial markets.
The announcement had an immediate effect on the market, with data showing 30-year bond yields fell back to 4.3%, having risen to levels above 5% not seen since 2002 earlier on Wednesday. There were similar falls for 20-year yields.
Ms Truss is expected to face public questioning about her economic plans for the first time on Thursday as she tours regional BBC radio stations in a morning round of interviews. Neither the prime minister nor the chancellor were anywhere to be seen on heard on the economy on Wednesday.
World
UK joins NATO operation to bolster Europe’s eastern flank after Russian drone incursions into Poland
NATO is to bolster Europe’s eastern flank, including the use of UK military resources, after Russia’s “reckless and unacceptable” violation of Polish airspace.
NATO Secretary-General Mark Rutte announced operation ‘Eastern Sentry’ on Friday, involving the deployment of equipment on the border with Belarus, Russia and Ukraine to deter potential Russian aggression.
Poland shot down Russian drones which flew over the country on Wednesday, something the military alliance has portrayed as an attempt by Moscow to test NATO’s military response.
It underlines long-held concerns about the potential expansion of Russia’s three-year war in Ukraine.
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Russia said its drones went astray because they were jammed, but European leaders believe the incursions were a deliberate provocation by Russia.
“It’s reckless and unacceptable. We can’t have Russian drones entering allied airspace,” Mr Rutte told a news conference.
Mark Rutte described Russian drones entering Polish airspace as ‘reckless’. Pic: Reuters
He added that allies, including the UK, France, Germany and Denmark, have so far committed to the mission with others set to join.
In a statement, the UK’s Ministry of Defence said: “The UK is fully committed to playing our part in NATO’s Eastern Sentry following the reckless and dangerous airspace violations by Russia”. It added that the details of the UK’s contribution would be announced soon.
Yvette Cooper visited Ukraine on Friday, her first visit to the country since becoming foreign secretary after a cabinet shake-up by Sir Keir Starmer.
Ms Cooper described her trip, which included a meeting with the country’s president, Volodymyr Zelenskyy, as a demonstration of solidarity with Ukraine.
“The UK will not stand idly by as Putin continues his barbaric invasion of Ukraine,” Ms Cooper said, noting what she said was the Russian president’s “complete disregard for sovereignty” by sending drones into NATO airspace.
Yvette Cooper met Volodymyr Zelenskyy in Kyiv on Friday. Pic: Valentyn Ogirenko/Reuters
Pic: Valentyn Ogirenko/Reuters
Prince Harry also made a surprise visit to Kyiv on Friday, where he met with wounded service members.
NATO already has substantial forces in eastern Europe, including thousands of troops, but the alliance did not explain how many additional forces would be involved in the new operation.
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Prince Harry’s surprise visit to Ukraine
Speaking at the alliance’s Brussels headquarters, US General Alexus Grynkewich told reporters the additional resources will enable the alliance to “plug gaps in the line” and concentrate forces wherever they’re needed while improving communications across NATO’s entire eastern flank.
NATO detailed a modest number of additional military assets – including two F-16 fighter jets and a frigate from Denmark, three Rafale fighter jets from France and four Eurofighter jets from Germany.
The announcement also coincided with a joint military exercise involving thousands of Russian and Belarusian troops, which began on Friday.
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Meanwhile, new measures were announced by the UK against Russia on Friday.
They included bans on 70 vessels the UK says are part of Russia’s “shadow fleet” that transports Russian oil in defiance of sanctions.
Some 30 individuals and companies – including Chinese and Turkey-based firms – were also sanctioned for their part in supplying Russia with electronics, chemicals, explosives and other weapons components.
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Donald Tusk, the Polish prime minister, dismissed Donald Trump’s suggestion that the drone incursion into Poland may have been “a mistake”.
“We would also wish that the drone attack on Poland was a mistake,” Mr Tusk wrote on X. “But it wasn’t. And we know it.”
US-led efforts to steer Moscow and Kyiv toward a peace settlement have so far failed to progress.
Kremlin spokesperson Dmitry Peskov said talks to end the war were currently on “pause” even though channels of communication remain open.
Thousands of troops are taking part in a joint military exercise between Russia and Belarus, as tensions with the EU run high following a Russian drone incursion into Polish airspace earlier this week.
The Zapad joint military exercise which began on Friday will involve drills in both Russia and Belarus as well as in the Baltic and Barents seas, the Russian defence ministry said.
Belarusian defence officials initially said about 13,000 troops would participate in the drill, but in May, its defence ministry said that would be cut nearly in half.
It comes just two days after Poland, with support from its NATO allies, shot down Russian drones over its airspace.
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Poland’s Prime Minister Donald Tusk on Friday morning hit back at a suggestion by US President Donald Trump on Thursday that the incursion may have been a “mistake”.
He said in a post on X: “We would also wish that the drone attack on Poland was a mistake. But it wasn’t. And we know it.”
Russia said its forces had been attacking Ukraine at the time of the incursions and that it had not intended to hit any targets in Poland.
Friday also saw Foreign Secretary Yvette Cooper travelling to Ukraine’s capital of Kyiv on the same day the UK announced fresh sanctions against Moscow.
Prince Harry was also in Kyiv for a surprise visit to help with the recovery of military personnel seriously injured in the three-year war with Russia.
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Prince Harry arrives in Kyiv
Ms Cooper, who was appointed foreign secretary last week, posted about her visit on X saying: “The UK’s support for Ukraine is steadfast. I am pleased to be in Kyiv on my first visit as Foreign Secretary.”
The UK’s new sanctions include bans on 70 vessels that Britain says are part of Russia’s “shadow fleet” that transports Russian oil in defiance of sanctions already in place.
Yvette Cooper with Volodymyr Zelenskyy in Kyiv. Pic: Valentyn Ogirenko/PA
Some 30 individuals and companies – including Chinese and Turkey-based firms – have also been sanctioned for their part in supplying Russia with electronics, chemicals, explosives and other weapons components.
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Meanwhile on the frontline, Ukrainian drones struck Russia’s oil-loading Primorsk port overnight, an SBU official said.
The attack caused fires and suspended oil-loading operations, the official added.
Russian defence systems also intercepted and destroyed 221 Ukrainian drones overnight.
Prince Harry has made a surprise visit to the Ukrainian capital of Kyiv, a spokesperson for the royal has said.
Harry, who served 10 years in the British Army, visited the city at the invitation of the Ukrainian government.
The Duke of Sussex travelled to the capital to help with the recovery of military personnel seriously injured in the three-year war with Russia.
Pic: Railway of Ukraine Ukrzaliznytsia/AP
Foreign Secretary Yvette Cooper will also be travelling to Kyiv on Friday in what will be her first foreign trip since being appointed to the job last week.
Her visit coincides with the UK launching a new package of Russia-related sanctions targeting ships carrying Russian oil as well as companies and individuals supplying electronics, chemicals and explosives used to make Russian weapons.
It comes as Russia and Belarus began a major joint military exercise on on NATO’s doorstep on Friday, just two days after Poland, with support from its NATO allies, shot down suspected Russian drones over its airspace.
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Drones shot down in Poland
The Zapad-2025 exercise – a show of force by Russia and its close ally – will involve drills in both countries and in the Baltic and Barents seas, the Russian defence ministry said.
Meanwhile on the frontline, Russian defence systems intercepted and destroyed 221 Ukrainian drones overnight,
including nine over the Moscow region, the ministry said on Friday.
The duke told the Guardian while on an overnight train to Kyiv: “We cannot stop the war but what we can do is do everything we can to help the recovery process.
“We can continue to humanise the people involved in this war and what they are going through.
“We have to keep it in the forefront of people’s minds. I hope this trip will help to bring it home to people because it’s easy to become desensitised to what has been going on.”
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Harry, who served two tours in Afghanistan, previously travelled to Ukraine in April, when he visited war victims as part of his work with wounded veterans.
The prince visited the Superhumans Center, an orthopaedic clinic in Lviv that treats and rehabilitates wounded military personnel and civilians.
Earlier this week, Harry said the King is “great” after he reunited with him at Clarence House for a private tea.
It was their first meeting in 19 months and lasted just 54 minutes.
The last time the father and son saw each other was in February 2024 when the prince flew to the UK after the monarch announced his cancer diagnosis.
Harry and his wife Meghan Markle have lived in California since they quit roles as senior working royals in March 2020.
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