London Daily

Focus on the big picture.
Saturday, May 30, 2026

Focus on growth not fiscal discipline, Kwasi Kwarteng tells Treasury

Focus on growth not fiscal discipline, Kwasi Kwarteng tells Treasury

Chancellor suggests change of emphasis is needed after he sacked top civil servant whom he credited for tight control of spending

UK Treasury officials have been told to refocus on annual growth of 2.5% rather than prioritising fiscal discipline, in a call with the chancellor, Kwasi Kwarteng.

The prime minister, Liz Truss, promised a return to the economic growth target for the UK of 2.5% a year during her campaign for the Conservative party leadership, a level that has not been consistently met since before the 2008 banking crisis.

An emergency fiscal package to bring in winter tax cuts for millions of people is expected late next week after national mourning for the Queen’s death.

Treasury sources confirmed that no requests had been made to the Office for Budget Responsibility to produce economic forecasts that would normally accompany the chancellor’s speech at a budget.

No 10 said legislation would not be needed to bring in the energy support package for households as it would involve guarantees between the government and private energy suppliers. However, some legislation may be needed to enact support for businesses.

Last week, Kwarteng sacked the Treasury’s permanent secretary, Tom Scholar, in his first day in the job, a move that sent shock waves through Whitehall. Numerous former Whitehall chiefs have questioned the decision, given Scholar’s extensive experience of handling financial crises.

Kwarteng told civil servants in a call that Scholar had led “an excellent finance ministry” – a reference to the department’s commitment to keeping a tight leash on spending. But in comments first reported by the FT, he said the focus must now be “entirely on growth”.

Kwarteng argued that by returning to the 2.5% growth rate, Britain would be better placed to bear down on its budget deficit. During her leadership campaign, Truss told ConservativeHome: “We should be growing on average at 2.5. And happiness is a faster-growing private sector than public sector. That’s what we need to achieve.”

The “fiscal event” planned by Kwarteng is expected to take place on Thursday or Friday next week, before the Commons breaks up for party conferences.

Measures will include reversing April’s rise in national insurance contributions and pledging not to increase corporation tax from 19% to 25% next year. These two measures alone, however, would entail permanent tax cuts of £30bn a year – more than 1% of national income. Kwarteng may also bring forward a one percentage-point cut in the basic rate of income tax.

Truss’s team has also spoken to business groups about changes to business rates and cuts to VAT to help with the energy crisis, as well as a longer-term review of these taxes.

The prime minister is planning to travel to the UN general assembly in New York in the days after the Queen’s funeral, returning in time to sit alongside Kwarteng in the Commons as he delivers his fiscal event.

The most obvious day for it would be Thursday 22 September, as parliamentary business has been postponed until after Wednesday 21st and Truss is likely to be in New York until then.

At the mini-budget, the government is expected to confirm plans to reverse the recent rise in national insurance, even though it benefits higher earners the most, handing back about £1,800 a year to top earners while the lowest earners get about £7 a year.

Newsletter

Related Articles

0:00
0:00
Close
Japanese Technology Firm Fujitsu Launches Advanced Artificial Intelligence Tool for Corporate Disclosures
South Africa Officially Launches Nationwide Campaign for Highly Contested Local Government Elections
United Kingdom Commits Additional Funding for Unexploded Ordnance Clearance in Laos
Singapore Announces Stringent New Greenhouse Gas Regulations for Commercial Cooling Systems
Cambodia and Thailand Hold High-Level Border Security Talks at United Nations Headquarters
Myanmar Military Government and China Sign Major Agreement to Upgrade Media and Cultural Cooperation
Knife Attack at Swiss Train Station Leaves Three Injured in Suspected Act of Domestic Terrorism
Transnational Extortion Gang Threatens Canadian Police With Army of One Thousand Armed Operatives
Australia Imposes Forty-Two-Day Quarantine on Cruise Ship Passengers Following Deadly Hantavirus Outbreak
International Monetary Fund Unlocks Seven Hundred Million United States Dollars for Sri Lanka Following Economic Reforms
Australia Launches Record One Point Four Billion Dollar Lawsuit Against Chemical Giant 3M Over Contamination
China and Canada Foreign Ministers Meet in Ottawa in Effort to Stabilize Strained Diplomatic Ties
Indonesia Demands Urgent United Nations Security Council Reform Amid Escalating Global Conflicts
Extreme Weather Patterns Trigger Severe Drought in Madagascar and Destructive Flooding in East Africa
Indian State of Karnataka Faces Political Upheaval as Chief Minister Siddaramaiah Abruptly Resigns
Philippines and Japan Reaffirm Defense Ties as Crucial for Indo-Pacific Regional Stability
Norway Joins French Nuclear Deterrence Initiative in Major Shift for European Security Architecture
Global Critical Mineral Alliances Expand as Western Nations Move to Counter Chinese Supply Dominance
United States Imposes Fifty Percent Tariffs on Mexican Steel and Aluminum Ahead of Trade Pact Review
European Union and China Head Toward Major Trade Conflict Over Clean Technology Exports
United States Economic Growth Severely Downgraded to One Point Six Percent as Stagflation Fears Mount
World Health Organization Warns Central African Ebola Epidemic is Outpacing Containment Efforts
United States Treasury Department Conditions Sanctions Relief on Reopening of the Strait of Hormuz
Iranian Air Defenses Intercept and Destroy United States Military Drone Over Bushehr Province
Iranian Armed Forces Launch Ballistic Missiles Toward Unspecified Targets Prompting Regional Condemnation
United Nations Secretary-General Warns Global Order Facing Highest Level of Conflict Since 1945
Israel Issues Sweeping Evacuation Orders in Southern Lebanon Amid Intensified Hezbollah Conflict
Russia Announces Systemic Military Strikes Targeting Ukrainian Defense and Energy Infrastructure
United States and Iranian Negotiators Reach Draft Agreement to Extend Ceasefire and Resume Nuclear Talks
United Nations Security Council Deeply Divided Over United States Capture of Venezuelan President
US and Iran Exchange Direct Military Strikes Amid Fragile Gulf Ceasefire
World Health Organization Warns of Catastrophic Ebola Outbreak in DR Congo
Russia Threatens New Wave of Strikes on Ukrainian Infrastructure and Embassies
Scientists Warn Atlantic Ocean Currents Could Collapse Faster Than Projected
Anthropic Reaches $900 Billion Valuation in Historic AI Funding Round
Washington Imposes Crippling Sanctions on Iranian Maritime Authority
Japan and the Philippines Initiate Strategic Intelligence-Sharing Pact
Microsoft Deploys Autonomous Computer-Using AI Agents to Global Markets
Anthropic Secures $45 Billion Compute Infrastructure Agreement With SpaceX
U.S. Director of National Intelligence Resigns Amid Administration Shakeup
Micron Technology Crosses Trillion-Dollar Valuation Amid Unprecedented Hardware Demand
Canada and Germany Finalize Historic Long-Term LNG Export Agreement
China Expands International Travel Restrictions on Domestic AI Researchers
Japan Approves Sweeping Overhaul of National Intelligence Apparatus
Global Airlines Scramble Logistics as Middle East Airspace Remains Fractured
Japan's Naphtha Imports Plunge 47 Percent Amid Strait of Hormuz Closure
Global Crude Prices Retreat Below $96 as Gulf Tensions Momentarily Ease
Generative AI Outperforms Human Baselines in Landmark Global Creativity Study
NASA Partners With Private Aerospace to Unveil Permanent Lunar Base Architecture
South Korean Equity Markets Surge on Next-Generation Memory Chip Frenzy
×