London Daily

Focus on the big picture.
Monday, Aug 04, 2025

Kwasi Kwarteng: We stopped consumer spending collapse

Kwasi Kwarteng: We stopped consumer spending collapse

Chancellor Kwasi Kwarteng has said his mini-budget was needed to stop a collapse in consumer spending, despite it sparking days of market turmoil.

He told his party's MPs that cutting taxes and limiting energy bills had protected the economy.

The plans, announced last Friday, led to a slump in the pound and the Bank of England stepping in to prevent the collapse of some pension funds.

Mr Kwarteng and Prime Minister Liz Truss defended their plans on Thursday.

In a series of BBC interviews, Ms Truss insisted "urgent action" was needed to boost the UK economy, adding she was "prepared to do what it takes to make that happen" and that the tax cuts outlined last week were the right plan.

This comes as a Yougov poll suggested Labour had opened up a massive 33-point lead over the Tories.

Mr Kwarteng tried to bolster support among Tory MPs by sending them a message saying he was working at pace to show markets he had a "clear plan".

The chancellor said he understood their concern about the mini-budget, which promised £45bn of tax cuts funded by government borrowing.

Fears this would be unaffordable and drive up interest rates had sent markets into a panic, with government borrowing costs surging, and the pound hitting a record low on Monday.

The market turmoil was fuelled by the lack of an independent forecast on the impact of the plans, which had been offered by the Office for Budget Responsibility, but was declined by the government.

Mr Kwarteng insisted the market volatility was "global" and being driven by the Ukraine war, Covid, and "a super strong US dollar".

He added that the government had needed to "act quickly".

"However I totally understand the need to be credible with markets," he told MPs. "We will show markets our plan is sound, credible and will work to drive growth."

He said the government would announce reforms in "childcare, business regulations, financial services, agriculture and more" over the next six weeks.

Ms Truss also argued market turmoil was being caused by global factors in a series of interviews with BBC local radio stations.

She insisted that "currencies are under pressure around the world".

Later, in BBC TV interviews, she said the UK was "in a very serious situation" but that was due to "the aftermath of Covid and Putin's war in Ukraine".

The Treasury select committee, which is led by Conservative MP Mel Stride, an ally of former leadership contender Rishi Sunak, rejected the government explanation.

In a letter to Mr Kwarteng on Thursday, Mr Stride said the government plans had "resulted in various significant and concerning reactions in the markets".

He said a drop in the price of government bonds following the announcement of the plans was greater than "any movement during the global financial crisis or the pandemic".

He said the financial impact of the mini-budget was larger than that of a typical Budget, but there had been no assessment by the independent Office for Budget Responsibility (OBR) to go with it, despite the OBR saying it could produce one.

"It is hard to conclude other than that an absence of a forecast has in some part driven the lack of confidence in the markets," he said. "Some may have formed the unfortunate impression that the government may be seeking to avoid scrutiny."

The OBR said on Thursday it had offered to provide a forecast for the mini-budget, but the chancellor had rejected that.

BBC economics editor Faisal Islam said this absence of a forecast had made the market reaction to the plans worse.

Mr Stride called on Mr Kwarteng to provide an OBR forecast "earlier" than 23 November, when the government is due to publish its medium term fiscal plan.

The OBR said on Thursday it had been asked by Mr Kwarteng to produce a first draft of its next economic forecasts by 7 October.

In an unusual move, Ms Truss will hold emergency talks with OBR head Richard Hughes on Friday, along with Mr Kwarteng.

Speaking to reporters on Thursday, Mr Kwarteng rejected claims the government's plans had made people worse off by contributing to a spike in UK mortgage rates.

It is the first time Mr Kwarteng has made a public comment on his mini-budget since Sunday, when he hinted there were more tax cuts to come.

Since then the plan has faced widespread criticism, with the International Monetary Fund and former Bank of England governor Mark Carney disparaging the plan.

On Wednesday, the Bank of England was forced to intervene, pledging to buy $65bn of government bonds in a bid to calm markets.

However, there are concerns the turmoil could continue and fears it might affect the housing market. A record number of mortgage products have been pulled since Friday, amid fears the Bank of England will have to raise interest rates much more sharply than previously expected.

Mr Kwarteng said the government's plan to limit energy bills for households and businesses would save people "thousands of pounds a year".

However, the chancellor said it was too early to say whether he would keep the previous government's promise to increase benefits next April in line with inflation.

He did, however, say the prime minister was committed to reinstating the triple lock on pensions, which means they increase by whichever is highest: inflation, the average wage rise, or 2.5%.


Watch: PM quizzed on mini-budget by BBC political editors


Newsletter

Related Articles

0:00
0:00
Close
India Rejects U.S. Tariff Threat, Defends Russian Oil Purchases
United States Establishes Strategic Bitcoin Reserve and Digital Asset Stockpile
Thousands of Private ChatGPT Conversations Accidentally Indexed by Google
China Tightens Mineral Controls, Curtailing Critical Inputs for Western Defence Contractors
OpenAI’s Bold Bet: Teaching AI to Think, Not Just Chat
Tesla Seeks Shareholder Approval for $29 Billion Compensation Package for Elon Musk
Nvidia is cutting prices on its RTX 50-series graphics cards after sales slowed and inventories piled up
Ghislaine Maxwell Transferred to Minimum-Security Prison Amid Ongoing DOJ Discussions
U.S. Tariffs Surge to Highest Levels in Nearly a Century Under Second Trump Term
Matt Taibbi Slams Media for Role in Russiagate Narrative
Pilots Call for Mental Health Support Without Stigma
All Five Trapped Miners Found Dead After El Teniente Mine Collapse
Ong Beng Seng Pleads Guilty in Corruption Case Linked to Former Singapore Transport Minister
BP’s Largest Oil and Gas Find in 25 Years Uncovered Offshore Brazil
Italy Fines Shein One Million Euros for Misleading Sustainability Claims
JPMorgan and Coinbase Unveil Partnership to Let Chase Cardholders Buy Crypto Directly
Declassified Annex Links Soros‑Affiliated Officials and Clinton Campaign to ‘Russiagate’ Narrative
UK's Online Safety Law: A Front for Censorship
Nationwide Protests Erupt in Brazil Demanding Presidential Resignation
Parents Abandon Child at Barcelona Airport Over Passport Issue
Mystery Surrounds Death of Brazilian Woman with iPhones Glued to Her Body
Bus Driver Discovers Toddler Hidden in Suitcase in New Zealand
Switzerland Celebrates 734 Years of Independence Amid Global Changes
U.S. Opens Official Investigation into Former Trump Prosecutor Jack Smith
Leaked audio of Canada's new PM Mark Carney admitting the truth about the Net Zero agenda: "We're gonna make a lot of money off of this."
China Enforces Comprehensive Ban on Cryptocurrency Activities
Absolutely 100% Realistic EVO Series Doll by EXDOLL (Chinese Company) used mainly for carnal purposes
World Economic Forum founder Klaus Schwab: "In this new world, we must accept... total transparency. You have to get used to it. You have to behave accordingly. But if you have nothing to hide, you shouldn't be afraid."
Meet Mufti Hamid Patel, head of Office for Standards in Education in Pakistan
George Soros tells the World Economic Forum: "President Trump is a con man and the ultimate narcissist, who wants the world to revolve around him."
Hamas are STARVING the hostages.
Decline in Tourism in Majorca Amidst Ongoing Anti-Tourism Protests
British Tourist Dies Following Hair Transplant in Turkey, Police Investigate
Poland Begins Excavation at Dziemiany After New Clue to World War II‑Era Nazi Treasure
WhatsApp Users Targeted in New Scam Involving Account Takeovers
Trump Threatens Canada with Tariffs Over Palestinian State Recognition
Trump Deploys Nuclear Submarines After Threats from Former Russian President Medvedev
Trump Sues Murdoch in “Heavyweight Bout”: Lawsuit Over Alleged Epstein Letter Sets Stage for Courtroom Showdown
Germany Enters Fiscal Crisis as Cabinet Approves €174 Billion in New Debt
Trump Administration Finalizes Broad Tariff Increases on Global Trade Partners
J.K. Rowling Limits Public Engagements Citing Safety Fears
JD.com Launches €2.2 Billion Bid for German Electronics Retailer Ceconomy
Azerbaijan Proceeds with Plan to Legalise Casinos on Artificial Islands
Former Judge Charged After Drunk Driving Crash Kills Comedian in Brazil
Jeff Bezos hasn’t paid a dollar in taxes for decades. He makes billions and pays $0 in taxes, LEGALLY
China Increases Use of Exit Bans Amid Rising U.S. Tensions
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Procter & Gamble to Raise U.S. Prices to Offset One‑Billion‑Dollar Tariff Cost
House Republicans Move to Defund OECD Over Global Tax Dispute
Botswana Seeks Controlling Stake in De Beers as Anglo American Prepares Exit
×