A senior Conservative MP said Liz Truss should not “bite the edges” but instead deliver a “powerful” and “significant” turnaround on her so far disastrous economic plan.
Mel Stride, the chairman of Parliament’s finance committee, told the BBC today: “My personal view is that [a U-turn] has to happen, we’ve reached a point where we need that very powerful and meaningful signal to the markets that fiscal soundness is firmly back on the table, and I think that means doing something right now and not delaying.
“Let’s also do something very important – right at the heart of this will be unwinding the position on corporate tax.
“The danger here is that the argument in the room lands in a place where they decide to bite the edges of that, and I’m afraid I don’t think that’s going to cut it, and you could end up in that circumstance in the worst case of all the worlds you’ve turned to, but you don’t regulate the markets the way we should.”
Stride’s comments came as Chancellor Kwasi Kwarteng cut short a visit to Washington on Thursday, adding to signs the government is preparing to announce a U-turn on its plan to roll back the corporate tax hike at the center of the much-vaunted “growth plan” . The chancellor was expected to land in London on Friday morning and head for talks with the prime minister.
Kwarteng’s so-called mini-budget, fully endorsed by the Trust, rocked financial markets with its £45bn package of unfunded tax cuts.
British government bond yields rose after the Sept. 23 announcement, a sign of faltering investor confidence in the UK’s fiscal soundness.
Both bonds and the pound steadied in early London trading on Friday as the Bank of England’s bond-buying program ends, with the yield on Britain’s 30-year bond falling 1.6% to 4.47%, and The pound was 0.3% higher at 1.127 against the US dollar – in a sign that trading sentiment was improving.
Stride said he hoped the chancellor would fly out of the US early to hold talks with the prime minister and forgo the tax cuts announced in the mini-budget.
He told the BBC Radio 4 programme: “There could be a U-turn and of course he will want to be in the room discussing it if that happens.”
Speaking later on BBC Breakfast, Stride said his advice to Kwarteng to ditch the tax cuts was: “Do it now.”
The comments come after Kwarteng insisted he was “not going anywhere” and would publish his medium-term fiscal plan on October 31 with estimates from the independent Office for Budget Responsibility (OBR).
Trade Minister Greg Hands, who backed Truss’s rival Rishi Sunak in the Tory leadership race, has been on the media rounds defending the government’s record and denying reports that MPs were plotting to oust Truss.
Hands said he did not believe reports that senior Tories were plotting the possibility of replacing Truss with a joint ticket of Sunak and Penny Mordaunt.
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The trade minister told Sky News: “I was a supporter of Rishi Sunak; somehow i would be very surprised by this story.
“It was only yesterday that I spoke to Penny Mordaunt. I don’t recognize this story at all.
Hands, who has been a prominent supporter of Sunak, was asked if the markets would have more confidence if Sunak was at No.10.
He said: “Rishi Sunak didn’t win the leadership race, Liz Truss won the leadership race. I’m dealing with the situation we’re in.”
Hands said “let’s wait and see” when asked if there would be more U-turns on the mini-budget.
He told Sky News: “Let’s wait and see. You won’t have to wait long until October 31 for the chancellor to set out those plans. I say that the Prime Minister and the Chancellor are absolutely determined, determined.
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