Liz Truss admits ‘disruption’ to UK economy but stands by forecast-free mini-budget
Liz Truss has for the first time acknowledged that “there has been disruption” to the UK economy following last week’s mini budget.
Since the chancellor’s announcement of £45bn in tax cuts the value of the pound has plummeted, nearly half of mortgages have been pulled and the Bank of England launched a £65bn bail-out to save pension funds from collapse.
Asked on Friday whether she accepted this is largely a crisis of her government’s own making, the prime minister said: “It was very, very important that we took urgent steps to deal with the costs that families are facing this winter, putting in place the energy price guarantee for which we’ve had to borrow to cover the cost… but also making sure that we are not raising taxes at a time where there are global economic forces caused by the war in Ukraine that we need to deal with.
“I recognise there has been disruption. But it was really, really important that we were able to get help to families as soon as possible – that help is coming this weekend.
“Because this is going to be a difficult winter and I’m determined to do all I can to help families and help the economy at this time.”
The government’s energy price guarantee comes into force on Saturday.
It means the average household shouldn’t have to pay more than £2,500 a year on their energy bills.
Ms Truss defended the decision to present last week’s mini-budget without an accompanying forecast from the Office for Budget Responsibility (OBR) due to the need to respond rapidly to rising energy prices, amid concerns that average annual household bills could soon reach £6,000.
The lack of such a forecast is blamed by many – including Mel Stride MP, the Conservative chair of the treasury select committee – of contributing to the week’s turmoil on the markets.
The OBR said a forecast had been offered to Chancellor Kwasi Kwarteng but was not commissioned.
Please use Chrome browser for a more accessible video player
Truss: Right to ‘take decisive action’
On Friday morning, the prime minister and chancellor met the OBR’s budget responsibility committee and afterwards issued a statement saying they “made it clear they value its scrutiny”.
Read more:
Will the housing market crash? Is my pension safe? Your questions answered
Storm clouds are thickening thanks to Truss and Kwarteng
But Ms Truss did not accept that failing to commission a forecast last week had been a mistake.
“It was important we acted quickly, in that timescale there couldn’t be a full OBR forecast. But we are committed to the OBR forecast.
“We are working together with the OBR. There will be an event on 23 November where the policies are fully analysed by the OBR, but it was a real priority to me to make sure we’re working to help struggling families.”
On Thursday, the chancellor committed to maintaining the triple lock on state pensions, which means they would rise in line with inflation (the triple lock means following whichever is higher consumer price inflation, average wage growth or 2.5%).
But the prime minister declined to offer a guarantee that benefits would also rise in line with inflation, despite a pledge from Boris Johnson’s government to do so.
Please use Chrome browser for a more accessible video player
‘People have no faith in govt’
Ms Truss said the issue is “something that the work and pensions secretary is looking at, and she will make an announcement in due course, as is the normal practice for the autumn”.
But the prime minister argued the reversal of the National Insurance hike and support for businesses’ energy bills will help families.
“I had real fears that businesses could go out of business this winter because they were facing unaffordable energy bills,” she added.
“We put in place a business scheme, we put in place support for households across the country. That has cost us money, but it was important we acted quickly.”
Click to subscribe to the Sky News Daily wherever you get your podcasts
With the latest polls putting Labour more than 30 points ahead of the Conservatives, many backbenchers are concerned about the prospect of losing their seats at the next election.
Senior MP Charles Walker said on Friday the conversation is no longer about winning, but how much the party loses by.
But the prime minister declined to comment on whether her party is heading towards electoral defeat, responding that “100% of her focus” is on supporting “the British public and British businesses through this difficult winter”.
A famine has been declared in Gaza City and the surrounding neighbourhoods.
The Integrated Food Security Phase Classification (IPC) – a globally recognised system for classifying the severity of food insecurity and malnutrition – has confirmed just four famines since it was established in 2004.
These were in Somalia in 2011, and in Sudan in 2017, 2020, and 2024.
The confirmation of famine in Gaza City is the IPC’s first outside of Africa.
“After 22 months of relentless conflict, over half a million people in the Gaza Strip are facing catastrophic conditions characterised by starvation, destitution and death,” the report said, adding that more than a million other people face a severe level of food insecurity.
Israel Gaza map
Over the next month conditions are also expected to worsen, with the famine projected to expand to Deir al-Balah and Khan Younis, the report said.
Nearly a third of the population (641,000 people) are expected to face catastrophic conditions while acute malnutrition is projected to continue getting worse rapidly.
Over the next year, the report said at least 132,000 children will suffer from acute malnutrition – double the organisation’s estimates from May 2024.
Israel says no famine in Gaza
Volker Turk, the UN Human Rights chief, said the famine is the direct result of actions taken by the Israeli government.
“It is a war crime to use starvation as method of warfare, and the resulting deaths may also amount to the war crime of wilful killing,” he said.
COGAT, the Israeli military agency that coordinates aid, has rejected the findings.
Israel’s foreign ministry said there is no famine in Gaza: “Over 100,000 trucks of aid have entered Gaza since the start of the war, and in recent weeks a massive influx of aid has flooded the Strip with staple foods and caused a sharp decline in food prices, which have plummeted in the markets.”
Another UN chief made a desperate plea to Israel’s prime minister to declare a ceasefire in the wake of the famine announcement.
Tom Fletcher, UN under-secretary general for humanitarian affairs, said famine could have been prevented in the strip if there hadn’t been a “systematic obstruction” of aid deliveries.
“My ask, my plea, my demand to Prime Minister Netanyahu and anyone who can reach him. Enough. Ceasefire. Open the crossings, north and south, all of them,” he said.
The IPC had previously warned famine was imminent in parts of Gaza, but had stopped short of a formal declaration.
Palestinians struggle to get aid at a community kitchen in Gaza City. Pic: AP
The latest report on Gaza from the UN Office for the Coordination of Humanitarian Affairs (OCHA) says there were almost 13,000 new admissions of children for acute malnutrition recorded in July.
The latest numbers from the Gaza health ministry are 251 dead as a result of famine and malnutrition, including 108 children.
But Israel has previously accused Hamas of inflating these figures, saying that most of the children who died had pre-existing health conditions.
The Ukrainian suspected of coordinating attacks on the Nord Stream pipelines had served in Ukraine’s Secret Service and in the Ukrainian Army’s special forces, Sky News understand.
Serhii K., 49, was arrested in northern Italy on Thursday following the issuance of a European arrest warrant by German prosecutors.
It is not known whether he was still serving at the time of the pipeline attack in 2022 and Ukraine’s government has always denied any involvement in the explosions.
According to sources close to the case, the suspect has been found in a three-star bungalow hotel named La Pescaccia in San Clemente, in the province of Rimini.
Please use Chrome browser for a more accessible video player
Man arrested over Nord Stream attacks
When military officers from Italy’s Carabinieri investigative and operational units raided his bedroom, he didn’t try to resist the arrest.
The hotel’s employees have been questioned, but no further evidence or any weapons were found, the sources added.
Serhii arrived on Italy’s Adriatic coast earlier this week, and the purpose of his trip was a holiday. He was found with his two children and his wife.
At least one of the four people within his family had a travel ticket issued in Poland. He crossed the Italian border with his car with a Ukrainian license plate last Tuesday.
He was travelling with his passport, and he used his real identity to check into the hotel, triggering an emergency alert on a police server, we have been told.
A satellite image shows gas from the Nord Stream pipeline bubbling up in the Baltic Sea. File pic: Roscosmos via Reuters
After the arrest, he was taken to the Rimini police station before being moved to a prison in Bologna, the regional capital, on Friday.
Deputy Bologna Prosecutor Licia Scagliarini has granted the German judicial authorities’ requests for Serhii’s surrender, but Sky News understands the man told the appeal court that he doesn’t consent to being handed over to Germany.
He also denied the charges and said he was in Ukraine during the Nord Stream sabotage. He added that he is currently in Italy for family reasons.
While leaving the court, he was seen making a typical Ukrainian nationalist ‘trident’ gesture to the reporters.
The next hearing is scheduled for 3 September, when the Bologna appeal court is set to decide whether Serhii will be extradited to Germany or not. He will remain in jail until then.
In Germany, he will face charges of collusion to cause an explosion, anti-constitutional sabotage and the destruction of structures.
German prosecutors believe he was part of a group of people who planted devices on the pipelines near the Danish island of Bornholm in September 2022.
Serhii and his accomplices are believed to have set off from Rostock on Germany’s north-eastern coast in a sailing yacht to carry out the attack.
Read more from Sky News:
Analysis: Russia has made Trump look weak
Captured ISIS fighter speaks from death row
The explosions severely damaged three pipelines transporting gas from Russia to Europe. It represented a significant escalation in the Ukraine conflict and worsening of the continent’s energy supply crisis.
According to a US intelligence report leaked in 2023, a pro-Ukraine group was behind the attack. Yet, no group has ever claimed responsibility.
Spare pipes for the Nord Stream 2 gas pipeline. File pic: Reuters/Fabian Bimmer
Sky News understands Genoa’s Prosecutor’s Office in northern Italy has requested their colleagues in Bologna to share the information related to Serhii.
Anti-terrorism prosecutors are investigating another alleged sabotage linked to the Russian shadow fleet oil tanker Seajewel, which sank off the port of Savona last February.
On Thursday, they asked an investigative police unit to figure out whether there is a link between that episode and the Nord Stream attacks.
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Sports2 years agoButton battles heat exhaustion in NASCAR debut
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment3 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike