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.”
More on Cost Of Living
Related Topics:
Please use Chrome browser for a more accessible video player
1:06
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”.
Advertisement
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.
Please use Chrome browser for a more accessible video player
“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.”
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.
In the deep blue waters of the Caribbean, visible from space, an unremarkable grey smudge.
Image: The USS Gerald R Ford seen off the US Virgin Islands on 1 December. Credit: Copernicus
But this is the USS Gerald R Ford: the largest, most deadly aircraft carrier in the world. And it is only part of an armada, apparently set on Venezuela.
Image: The Gerald R Ford, USS Winston S Churchill, USS Mahan and USS Bainbridge in the Atlantic on 13 November. Source: US Department of Defense
From being able to count on one hand the number of warships and boats in the Caribbean, since August we can see the build-up of the number, and variety of ships under US command.
And that’s only at sea – air power has also been deployed, with bombers flying over the Caribbean, and even along the Venezuelan coast, as recently as this week.
Image: A Boeing B-52H Stratofortress near Venezuelan coast from Minot Air Force Base, North Dakota, on 3 December. Credit: FlightRadar24
Sky’s Data & Forensics unit has verified that in the past four months since strikes began, 23 boats have been targeted in 22 strikes, killing 87 people.
Datawrapper
This content is provided by Datawrapper, which may be using cookies and other technologies.
To show you this content, we need your permission to use cookies.
You can use the buttons below to amend your preferences to enable Datawrapper cookies or to allow those cookies just once.
You can change your settings at any time via the Privacy Options.
Unfortunately we have been unable to verify if you have consented to Datawrapper cookies.
To view this content you can use the button below to allow Datawrapper cookies for this session only.
It was the first such strike since 15 November and since the defence secretary, sometimes referred to as secretary of war, Pete Hegseth, came under scrutiny for an alleged “second strike” in an earlier attack.
The US says it carried out the action because of drugs – and there has been some evidence to support its assertion.
The Dominican Republic said it had recovered the contents of one boat hit by a strike – a huge haul of cocaine.
Legal issues
Whatever the cargo, though, there are serious, disputed legal issues.
Firstly, it is contested whether by designating the people on the boats as narcoterrorists, it makes them lawful military targets – or whether the strikes are in fact extra judicial murders of civilians at sea.
And more specifically… well, let’s go back to that very first video, of the very first strike.
What this footage doesn’t show is what came afterwards – an alleged “second strike” that targeted people in the water posing no apparent threat.
And the 4 December strike shows this strategy isn’t over.
The strikes are just part of the story, as warships and planes have headed toward the region in huge numbers.
Drugs or oil?
Some have said this isn’t about drugs at all, but oil.
Venezuela has lots – the world’s largest proven reserves.
Speaking to the faithful on Fox News, Republican congresswoman – and Trump supporter – Maria Salazar said access to Venezuela would be a “field day” for American oil companies.
And Maduro himself has taken up that theme. A few days later, he wrote this letter to OPEC – which represents major oil producing nations – to “address the growing and illegal threats made by the government of the United States against Venezuela”.
That’s how Maduro has framed this – a plan by the US “to seize Venezuela’s vast oil reserves… through lethal military force”.
Lethal military force – an understatement when you think of the armada lying in wait.
And it may be called upon soon. Trump on Tuesday said he’s preparing to take these strikes from international waters on to Venezuelan territory.
Maduro has complained of 22 weeks of “aggression”. There may be many more to come.
Additional reporting by Sophia Massam, junior digital investigations journalist.
The Data X Forensics team is a multi-skilled unit dedicated to providing transparent journalism from Sky News. We gather, analyse and visualise data to tell data-driven stories. We combine traditional reporting skills with advanced analysis of satellite images, social media and other open source information. Through multimedia storytelling we aim to better explain the world while also showing how our journalism is done.
Donald Trump’s bruising assessment of Europe as “weak” and “decaying” is a bitter blow to nations already reeling from the release of his national security strategy.
At the end of the 45-minute interview with Politico, EU leaders might be forgiven for thinking, with friends like these, who needs enemies?
“Europe doesn’t know what to do,” Trump said, “They want to be politically correct, and it makes them weak.”
Image: Trump meets leaders from Ukraine, Germany, France, the UK, Italy, and Finland, as well as the EU and NATO, in August Pic: Reuters
On the contrary, I would imagine some choice words were being uttered in European capitals as they waded through the string of insults.
What has Trump said?
First up, the US president criticised European leaders for failing to end the war between Russia and Ukraine.
“They talk but they don’t produce. And the war just keeps going on and on,” he said.
The fact that the Russians have shown no real commitment to stopping the invasion they started is not mentioned.
Instead, the blame is laid squarely at the feet of Ukraine and its allies in Europe.
“I think if I weren’t president, we would have had World War III,” Trump suggested, while concluding that Moscow is in the stronger position.
Image: Trump meeting European leaders in the Oval Office in August. Pic: @RapidResponse47
Does he have a point?
Critics claim that the White House has emboldened the Kremlin and brought Putin in from the cold with a summit and photo opportunities.
Trump highlights the fact that his return to office forced many European NATO members to increase defence spending drastically.
On this, he is correct – the growing insecurity around how long America can be relied on has brought security into sharp focus.
German Chancellor Friedrich Merz on Tuesday claimed some of its contents were unacceptable from a European point of view.
“I see no need for America to want to save democracy in Europe. If it was necessary to save it, we would manage it on our own,” he told a news conference in Rhineland-Palatinate, the German state where Trump’s paternal grandfather was born.
Image: Meeting between, left to right, Keir Starmer of the UK, Volodymyr Zelenskyy of Ukraine, Emmanuel Macron of France, Donald Tusk of Poland, and Friedrich Merz of Germany. Pic: AP
For this reason, Merz reiterated that Europe and Germany must become more independent of America for their security policies.
However, he noted, “I say in my discussions with the Americans, ‘America first’ is fine, but America alone cannot be in your interests.”
For his part, while Trump said he liked most of Europe’s current leaders, he warned they were “destroying” their countries with their migration policies.
He said: “Europe is a different place, and if it keeps going the way it’s going, Europe will not be…in my opinion, many of those countries will not be viable countries any longer. Their immigration policy is a disaster”.
He added: “Most European nations… they’re decaying.”
Again, the comments echoed his security strategy, which warned immigration risked “civilisation erasure” in Europe.
There’s no doubt immigration is a major concern for many of the continent’s leaders and voters.
Please use Chrome browser for a more accessible video player
8:11
Zelenskyy meets European leaders
However, irregular crossings into the EU fell 22% in the first 10 months of 2025 according to Frontex, a fact which seems to have passed the president and his team by.
“Within a few decades at the latest, certain Nato members will become majority non-European”, his security document warned.
It also suggested “cultivating resistance” in Europe “to restore former greatness” leading to speculation about how America might intervene in European politics.
Trump appeared to add further clarification on Tuesday, saying while he did not “want to run Europe”, he would consider “endorsing” his preferred candidates in future elections.
Spotify
This content is provided by Spotify, which may be using cookies and other technologies.
To show you this content, we need your permission to use cookies.
You can use the buttons below to amend your preferences to enable Spotify cookies or to allow those cookies just once.
You can change your settings at any time via the Privacy Options.
Unfortunately we have been unable to verify if you have consented to Spotify cookies.
To view this content you can use the button below to allow Spotify cookies for this session only.
This comment will also ruffle feathers on the continent where the European Council President has already warned Trump’s administration against interfering in Europe’s affairs.
“Allies do not threaten to interfere in the domestic political choices of their allies,” Antonio Costa said on Monday.
“The US cannot replace Europe in what its vision is of free expression… Europe must be sovereign.”
So, what will happen now, and how will Europe’s leaders respond?
If you are hoping for a showdown, you will likely be disappointed.
Like him or loathe him, Europe’s leaders need Trump.
They need the might of America and want to try to secure continued support for Ukraine.
While the next few days will be filled with politely scripted statements or rejections of the president’s comments, most of his allies know on this occasion they are probably best to grin and bear it.
A “cheap ceasefire” between Ukraine and Russia – with Kyiv forced to surrender land – would create an “expensive peace” for the whole of Europe, Norway’s foreign minister has warned.
Espen Barth Eide explained this could mean security challenges for generations, with the continent’s whole future “on the line”.
It was why Ukraine, its European allies and the US should seek to agree a common position when trying to secure a settlement with Vladimir Putin, the top Norwegian diplomat told Sky News in an interview during a visit to London on Tuesday.
“I very much hope that we will have peace in Ukraine and nobody wants that more than the Ukrainians themselves,” Mr Eide said.
“But I am worried that we might push this to what in quotation marks is a ‘cheap ceasefire’, which will lead to a very expensive peace.”
Explaining what he meant, Mr Eide said a post-war era follows every conflict – big or small.
Please use Chrome browser for a more accessible video player
3:29
Inside Ukraine’s underground military HQ
How that plays out typically depends upon the conditions under which the fighting stopped.
“If you are not careful, you will lock in certain things that it will be hard to overcome,” he said.
“So if we leave with deep uncertainties, or if we allow a kind of a new Yalta, a new Iron Curtain, to descend on Europe as we come to peace in Ukraine, that’s problematic for the whole of Europe. So our future is very much on the line here.”
He said this mattered most for Ukrainians – but the outcome of the war will also affect the future of his country, the UK and the rest of the continent.
“This has to be taken more seriously… It’s a conflict in Europe, it has global consequences, but it’s fundamentally a war in our continent and the way it’s solved matters to our coming generations,” the Norwegian foreign minister said.
Russia ‘will know very well how to exploit vagueness’
Asked what he meant by a cheap ceasefire, he said: “If Ukraine is forced to give up territory that it currently militarily holds, I think that would be very problematic.
“If restrictions are imposed on future sovereignty. If there’s vagueness on what was actually agreed that can be exploited. I think our Russian neighbours will know very well how to exploit that vagueness in order to keep a small flame burning to annoy us in the future.”
Progress being made on peace talks
Referring to the latest round of peace talks, initiated by Donald Trump, Mr Eide signalled that progress was being made from an initial 28-point peace plan proposed a couple of weeks ago by the United States that favoured Moscow over Kyiv.
That document included a requirement for the Ukrainian side to give up territory it still holds in eastern Ukraine to Russia and Mr Eide described it as “problematic in many aspects”.
But he said: “I think we’ve now had a good conversation between Ukraine, leading European countries and the US on how to adapt and develop that into something which might be a good platform for Ukraine and its allies to go to Russia with.
“We still don’t know the Russian response, but what I do know is the more we are in agreement as the West, the better Ukraine will stand.”