London Daily

Focus on the big picture.
Monday, Aug 25, 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
Vietnam Evacuates Hundreds of Thousands as Typhoon Kajiki Strikes; China’s Sanya Shuts Down
UK Government Delays Decision on China’s Proposed London Embassy Amid Concerns Over Redacted Plans
A 150-Year Tradition to Be Abolished? Uproar Over the Popular Central Park Attraction
A new faith called Robotheism claims artificial intelligence isn’t just smart but actually God itself
Deputy Prime Minister Angela Rayner Purchases Third Property Amid Housing Tax Reforms Debate
HSBC Switzerland Ends Relationships with Over 1,000 Clients from Saudi Arabia, Lebanon, Qatar, and Egypt
Sharia Law Made Legally Binding in Austria Despite Warnings Over 'Incompatible' Values
Italian Facebook Group Sharing Intimate Images Without Consent Shut Down Amid Police Investigation
Dutch Foreign Minister Resigns Amid Deadlock Over Israel Sanctions
Trump and Allies Send Messages of Support to Ukraine on Independence Day Amid Ongoing Conflict
China Reels as Telegram Chat Group Shares Hidden-Camera Footage of Women and Children
Sam Nicoresti becomes first transgender comedian to win Edinburgh Comedy Award
Builders uncover historic human remains in Lancashire house renovation
Australia Wants to Tax Your Empty Bedrooms
MotoGP Cameraman Narrowly Avoids Pedro Acosta Crash at Hungarian Grand Prix
FBI Investigates John Bolton Over Classified Documents in High-Profile Raids
Report reveals OpenAI pitched national ChatGPT Plus subscription to UK ministers
Labour set to freeze income tax thresholds in long-term 'stealth' tax raid
Coca‑Cola explores sale of Costa coffee chain
Trial hears dog walker was chased and fatally stabbed by trio
Restaurateur resigns from government hospitality council over tax criticism
Spanish City funfair shut after serious ride injury
Suspected arson at Ilford restaurant leaves three in critical condition
Tottenham beat Manchester City to go top of Premier League
Bank holiday heatwave to hit 30°C before remnants of Hurricane Erin arrive
UK to deploy immigration advisers to West Africa to block fake visas
Nurse who raped woman continued working for a year despite police alert
Drought forces closures of England’s canal routes, canceling boat holidays
Sweet tooth scents: food-inspired perfumes surge as weight-loss drugs suppress appetites
Experts warn Britain dangerously reliant on imported food
Family of Notting Hill Carnival murder victim call event unmanageable
Bunkers, Billions and Apocalypse: The Secret Compounds of Zuckerberg and the Tech Giants
Ukraine Declares De Facto War on Hungary and Slovakia with Terror Drone Strikes on Their Gas Lifeline
Animated K-pop Musical ‘KPop Demon Hunters’ Becomes Netflix’s Most-Watched Original Animated Film
New York Appeals Court Voids Nearly $500 Million Civil Fraud Penalty Against Trump While Upholding Fraud Liability
Elon Musk tweeted, “Europe is dying”
Far-Right Activist Convicted of Incitement Changes Gender and Demands: "Send Me to a Women’s Prison" | The Storm in Germany
Hungary Criticizes Ukraine: "Violating Our Sovereignty"
Will this be the first country to return to negative interest rates?
Child-free hotels spark controversy
North Korea is where this 95-year-old wants to die. South Korea won’t let him go. Is this our ally or a human rights enemy?
Hong Kong Launches Regulatory Regime and Trials for HKD-Backed Stablecoins
China rehearses September 3 Victory Day parade as imagery points to ‘loyal wingman’ FH-97 family presence
Trump Called Viktor Orbán: "Why Are You Using the Veto"
Horror in the Skies: Plane Engine Exploded, Passengers Sent Farewell Messages
MSNBC Rebrands as MS NOW Amid Comcast’s Cable Spin-Off
AI in Policing: Draft One Helps Speed Up Reports but Raises Legal and Ethical Concerns
Shame in Norway: Crown Princess’s Son Accused of Four Rapes
Apple Begins Simultaneous iPhone 17 Production in India and China
A Robot to Give Birth: The Chinese Announcement That Shakes the World
×