Liz Truss says she will ‘absolutely’ not cut public spending despite warning of £62bn shortfall

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2 years ago

October 12, 2022

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Liz Truss has pledged not to cut public spending to balance the books in her first PMQs since the chancellor’s contentious mini-budget – despite a leading economics-focused think tank warning the government is billions short of the sums needed.

The prime minister insisted she was “absolutely” not planning public spending reductions, but vowed that taxpayers’ money would be used well.

Her pledge comes as the government continues to be under pressure for the market turmoil that erupted after the government announced its £45bn package of unfunded tax cuts last month.

Speaking to Sky News after PMQs, Mel Stride, the Chair of the Treasury Select Committee, said that Chancellor Kwasi Kwarteng should not take the reversal of some of his tax cuts “off the table”.

He said that “holding the line” on the measures announced in his mini-budget will be even more difficult following Ms Truss’ comments on public spending, and that 31 October – the date of the chancellor’s debt-cutting plan being published – is a moment for a “reset”.

He told political editor Beth Rigby: “(Chancellor Kwarteng) has to be so careful that he doesn’t take any chances, he has to be sure the markets are going to like what they hear, that’s why I think rowing back on the tax cuts have to remain on the table.

“It’s extraordinarily important that whatever the chancellor comes forward with on the 31st, that it cuts it with the market.

“If there is any doubt in his mind about anything he is doing, he would do well to think again, he has got to play it ultra safe.”

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Economists have suggested that to gain a grip on the national finances, the government will have to make spending cuts or tax rises worth tens of billions of pounds.

The “Green Budget”, from the Institute for Fiscal Studies and Citi, the investment bank, warned this week that the chancellor would have to cut spending or raise taxes by £62bn if he is to stabilise or reduce the national debt, as he has repeatedly promised in recent weeks.

That shortfall is a direct consequence of the measures announced since the Truss government took office, which include its reversal of various tax increases such as corporation tax and national insurance and its energy price guarantee.

Chancellor Kwasi Kwarteng would instead have to carry out dramatic cuts, the think tank said, potentially reducing government investment and slashing public spending on departments that have already been squeezed during the austerity years.

The cost of government spending increased on Wednesday, with the pound falling against the dollar.

‘Kamikaze budget’

At PMQs, Sir Keir Starmer reminded Ms Truss that during her leadership campaign over the summer she had pledged: “I’m not planning public spending reductions.”

Asked if she was going to stick to that, the prime minister replied: “Absolutely… We are spending almost £1tn of public spending. We were spending £700bn back in 2010.

“What we will make sure is that over the medium term the debt is falling. But we will do that not by cutting public spending but by making sure we spend public money well.”

The Labour leader once again called for the government to reverse their “kamikaze budget”, warning Conservative MPs that voters will not forgive their party if they “defend” it.

‘Ducking responsibility’

Sir Keir also accused the prime minister of “ducking responsibility” for the consequences of her government’s economic policies and of being “lost in denial”.

“Who voted for this?” he questioned.

Ms Truss responded: “The way that we will get our country growing is through more jobs, more growth, more opportunities, not through higher taxes, higher spending and his friends in the union stopping hard-working people getting to work.”

‘No-fault’ evictions pledge

Also during PMQs, Ms Truss committed to honouring a 2019 Tory manifesto pledge to scrap “no-fault” evictions of private renters in England.

There had been reports earlier this week that the government could try and shelve the commitment.

On Tuesday, Downing Street said no decisions had been made on whether to pause a promised ban on Section 21 notices, which allow landlords to evict a tenant without giving a reason.

Labour MP Graham Stringer asked Ms Truss: “Can the PM reassure the 11 million private renters in this country that she will carry out her commitment to get rid of no-fault evictions?”

Ms Truss replied: “I can.”

Energy help

The prime minister also announced that Jacob Rees-Mogg, the business secretary, is working on a scheme to help households and businesses bring down their energy costs.

Last Friday, Ms Truss ruled out launching an energy-saving public information campaign after warnings from the National Grid Electricity System Operator that planned three-hour power blackouts could be imposed in some areas.

Only two days ago Downing Street had defended Ms Truss’s decision not to launch a “bespoke” energy-saving public information campaign during the energy crisis, saying it is down to individuals to decide what is right for them.

Mr Kwarteng has already dropped plans to abolish the 45% tax rate on earnings over £150,000 after internal criticism of the policy, though he has insisted he remains committed to the rest of his mini-budget.

Asked what happens after the Bank stops buying bonds on Friday, the chancellor said: “Well, it’s a matter for the governor.”

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World

Donald Trump confirms Mexico and Canada tariffs – prompting a stock sell-off

Published

10 hours ago

March 4, 2025

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Donald Trump confirms Mexico and Canada tariffs - prompting a stock sell-off

Donald Trump’s 25% tariffs on goods from Mexico and Canada have come into effect, as has an additional 10% on Chinese products, bringing the total import tax to 20%.

The US president confirmed the tariffs in a speech at the White House – and his announcement sent US and European stocks down sharply.

The tariffs will be felt heavily by US companies which have factories in Canada and Mexico, such as carmakers.

Mr Trump said: “They’re going to have a tariff. So what they have to do is build their car plants, frankly, and other things in the United States, in which case they have no tariffs.”

There’s “no room left” for a deal that would see the tariffs shelved if fentanyl flowing into the US is curbed by its neighbours, he added.

Mexico and Canada face tariffs of 25%, with 10% for Canadian energy, the Trump administration confirmed.

And tariffs on Chinese imports have doubled, raising them from 10% to 20%.

Canada announced it would retaliate immediately, imposing 25% tariffs on US imports worth C$30bn (£16.3bn). It added the tariffs would be extended in 21 days to cover more US goods entering the country if the US did not lift its sanctions against Canada.

China also vowed to retaliate and reiterated its stance that the Trump administration was trying to “shift the blame” and
“bully” Beijing over fentanyl flows.

Mr Trump’s speech stoked fears of a trade war in North America, prompting a financial market sell-off.

Stock market indexes the Dow Jones Industrial Average and the Nasdaq Composite fell by 1.48% and 2.64% respectively on Monday.

The share prices for automobile companies including General Motors, which has significant truck production in Mexico, Automaker and Ford also fell.

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Consumers in the US could see price hikes within days, an expert has said.

Gustavo Flores-Macias, a public policy professor at Cornell University, New York, said “the automobile sector, in particular, is likely to see considerable negative consequences”.

This is due to supply chains that “crisscross the three countries in the manufacturing process” and ” because of the expected increase in the price of vehicles, which can dampen demand,” he added.

The Trump administration is gearing up to bring in other tariffs in the coming weeks.

On 2 April, reciprocal tariffs will take effect on all countries that impose duties on US products.

He is also considering 25% tariffs on goods from the EU “very soon” after claiming the bloc was created to “screw the United States”.

World

More than 30 killed in Bolivia bus crash – second deadly collision within days

Published

10 hours ago

March 4, 2025

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More than 30 killed in Bolivia bus crash - second deadly collision within days

A truck has collided with a bus in southern Bolivia, killing at least 31 people, according to police – just two days after a deadly crash claimed at least 37 lives.

Officers said the bus rolled some 500m (1,640ft) down a ravine after the collision on Monday, which took place on the highway between Oruro, in the Bolivian Altiplano, and the highland mining city of Potosi.

The driver of the truck has been arrested, while the cause of the accident is under investigation.

Police spokesperson Limbert Choque said men and women were among the dead, and 22 people suffered injuries.

Bolivia’s President, Luis Arce, expressed condolences for the victims on social media: “This unfortunate event must be investigated to establish responsibilities,” he said in a post on Facebook.

“We send our most sincere condolences to the bereaved families, wishing them the necessary strength to face these difficult times.”

On Saturday morning, a crash between two buses killed more than three dozen people in the same region.

It happened between Colchani and the city of Uyuni, a major tourist attraction and the world’s largest salt flat.

Coincidentally, one of the buses was heading to Oruro, where one of the most important carnival celebrations in Latin America is currently taking place.

More than 30 people were also killed after a bus crash on 17 February.

In that crash, police said the driver appeared to have lost control of the vehicle, causing it to drop more than 800m (2,600ft) off a precipice in the southwestern area of Yocalla.

Bolivia’s mountainous, undermaintained and poorly supervised roads are some of the deadliest in the world, claiming an average 1,400 fatalities every year.

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The Pope has had ‘two episodes of acute respiratory failure’, Vatican says

Published

10 hours ago

March 4, 2025

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The Pope has had 'two episodes of acute respiratory failure', Vatican says

The Pope has had two episodes of “acute respiratory failure”, the Vatican has said.

The 88-year-old has been in hospital since 14 February with a severe respiratory infection that triggered other complications.

The Vatican said the respiratory failures were caused by “significant accumulation” of mucus in his lungs and a “bronchospasm”, akin to an asthma attack.

Doctors were then required to perform two bronchoscopies – a test which sees medics use a long, thin, telescope with a light to look into the lungs – to evaluate the Pope’s air passages, the statement said.

“In the afternoon, non-invasive mechanical ventilation was resumed,” the Vatican continued. “The Holy Father has always remained vigilant, oriented and collaborative. The prognosis remains reserved.”

Vatican sources said the situation had been calm this morning, before becoming worse this afternoon.

The respiratory issues the Pope suffered today are due to an ongoing infection rather than a new one but he is not out of danger, they added.

Asked if the Pope is in good spirits, they gave no answer. When asked if the Vatican’s apartment is getting ready to welcome Francis back, the source said it was too premature to discuss this.

His clinical picture remains complex, they said.

Earlier on Monday, Pope Francis issued a written message after Vatican officials begged him to let his voice be heard following more than two weeks out of public view.

He thanked his doctors for their care and well-wishers for their prayers, before praying for peace in Ukraine and elsewhere.

“From here, war appears even more absurd,” he wrote.