London Daily

Focus on the big picture.
Sunday, Mar 29, 2026

Rishi Sunak attacks Truss tax cut plan after big interest rate rise

Rishi Sunak attacks Truss tax cut plan after big interest rate rise

Chancellor Nadhim Zahawi said to be on holiday as Bank of England adds to dire economic outlook
Rishi Sunak has seized on the Bank of England’s historic half-point rate rise to claim that Liz Truss’s plan for unfunded tax cuts would “make everyone poorer”.

The Bank’s gloomy forecasts, published alongside the rate decision, underline the scale of the challenge facing the next prime minister, with the economy projected to plunge into a prolonged recession by the end of the year.

Despite the dire economic outlook, the Guardian has learned the chancellor, Nadhim Zahawi, is away from Westminster, as the caretaker government takes a back seat while the leadership contest rages.

Zahawi was said to be working remotely from a family holiday.

In a statement, the chancellor said: “There is no such thing as a holiday and not working. I never had that in the private sector, nor in government. Ask any entrepreneur and they can tell you that.”

He added: “Millions of us dream about getting away with our families, but the privilege and responsibility of public service means that you never get to switch off, that’s why I have had calls and briefings every day and continue to do so.” The prime minister is currently on holiday.

Zahawi put out a written statement on the Bank’s announcement and is holding meetings with its governor, Andrew Bailey, later on Thursday and the Treasury’s chief economist.

Sunak, the underdog in the leadership race, has repeatedly said throughout the contest that he would wait until inflation was under control, before embarking on a tax-cutting spree.

By contrast, Truss has promised £30bn worth of tax cuts, which Sunak has claimed would push up borrowing and boost inflation.

“The Bank has acted today and it is imperative that any future government grips inflation, not exacerbates it,” he said.

“Increasing borrowing will put upward pressure on interest rates, which will mean increased payments on people’s mortgages. It will also make high inflation and high prices last for longer, making everyone poorer.”

Truss has cited the rightwing economist Patrick Minford to support her argument. As he stepped up his attack on her approach, Sunak tweeted a link to a ready reckoner showing the cost to mortgage borrowers, if interest rates rose to 7%, as Minford has said they might have to.

Truss said the rate rise “underlines the need for the bold economic plan that I am advocating”.

She promised an emergency budget to “kickstart my plan to get our economy growing and offer immediate help to people struggling with their bills” though she has so far proposed few measures to deal with the cost of living, aside from suspending the green levies on energy bills, and reversing recent tax rises.

Earlier, Truss supporter Suella Braverman said that if the foreign secretary became prime minister, she would review whether the Bank’s mandate was “fit for purpose” and examine its “exclusionary independence on interest rates”.

Braverman, the attorney general, told Sky News the Tory leadership frontrunner would look again at the Bank’s powers. “Interest rates should have been raised a long time ago and the Bank of England has been too slow in this regard,” she said.

She added: “Liz Truss has made clear that she wants to review the mandate that the Bank of England has, so that’s going to be looking in detail at exactly what the Bank of England does and see whether it’s actually fit for purpose in terms of its entire exclusionary independence over interest rates.”

Truss told a Conservative hustings on Wednesday night she would alter the Bank’s mandate because of the changing economic picture. “The best way of dealing with inflation is monetary policy, and what I have said is I want to change the Bank of England’s mandate to make sure in the future it matches some of the most effective central banks in the world at controlling inflation.

“The last time the mandate was looked at was in 1997 under Gordon Brown. Things are very, very different now.”

Mel Stride, the chair of the Treasury select committee and a Sunak supporter, said it would be dangerous to cut taxes this autumn. “What we must do now is avoid stoking the inflation and making the problem even worse,” he said. “One of the ways you can make the problem very significantly worse is by coming forward with large-scale, tens of billions of pounds’ worth, of unfunded tax cuts.”

He added: “The big decision, fiscally, here is around tax. You have to do it in a measured way and at the right time but not start coming forward with tens of billions of unfunded tax cuts right now. I think that would be really quite dangerous.”
Newsletter

Related Articles

0:00
0:00
Close
Thousands Rally in London to Oppose Rise of Far-Right Movements
Hong Kong Official Rejects Allegations of Surveillance Orders Targeting UK-Based Dissidents
PayPal Expands Cryptocurrency Services to Allow UK Users to Buy and Sell Bitcoin
UK Minister Challenges Reform Party’s ‘Pro-Family’ Agenda as Debate Intensifies
Concerns Grow Over Meningitis Risk Among UK Students Amid Warning Signs of New Outbreaks
Japanese Grand Prix 2026: Schedule, UK Start Times and Full Broadcast Details
Electric Vehicles Seen as Strategic Solution to UK Fuel Reserve Concerns
Rise of Lone-Actor Threats and Online Radicalisation Drives New Wave of Antisemitic Attacks in the UK
Canada Advances Plan to Ban Cryptocurrency Donations in Election Campaigns
UK Faces Looming Medicine Shortages as Iran Conflict Threatens Supply Chains
Deadly Meningitis Outbreak in the U.K. Highlights Urgent Need for Vaccination
Fresh Claims Emerge Over Harry and Meghan’s Australia Visit as Insider Speaks Out
NATO Assessment Indicates UK Defence Spending Has Fallen Below Alliance Average
FTSE 100 Slips as Middle East Tensions Weigh on Investor Sentiment
UK Economy Begins to Feel Early Impact of Iran Conflict as Policy Challenges Intensify
Russian National Jailed in UK After Assault Case Linked to Barron Trump’s Alert
Energy Price Surge Accelerates Shift Away from Fossil Fuels in UK Homes
UK Museums House More Than 260,000 Human Remains, New Report Reveals
Surging UK Gilt Yields Reflect Inflation Pressures and Fiscal Uncertainty
UK Issues Updated Guidance on Children’s Screen Time with Focus on Balance and Wellbeing
UK Migration Figures Show Shifting Trends Across Asylum, Visas and Channel Crossings
UK Watchdog Launches Probe into Five Firms Over Alleged Fake Reviews and Ratings
Jaguar Land Rover Halts Production at UK Plant Amid Supplier Disruption
UK Police Reverse Position, Confirm Arrests Will Resume for Palestine Action Protests
UK Small Businesses Face Europe’s Steepest Cost Pressures, New Survey Reveals
US Envoy Urges UK to Proceed with King’s Visit Amid Diplomatic Sensitivities
FTSE 100 Drops Over One Percent as Middle East Tensions Weigh on Markets
UK CO2 Plant Set to Reopen as Authorities Move to Safeguard Supplies Amid Middle East Tensions
Trump Urges Stronger Defence Investment as He Questions Allied Naval Capabilities
New COVID Variant Detected in UK Raises Concerns Over Vaccine Effectiveness
FTSE Russell Moves to Standardise Free-Float Rules for UK and International Listings
HBO Max Launches in UK and Ireland, Marking Major Step in Global Streaming Expansion
UK Signals Readiness to Seize Russian ‘Shadow Fleet’ Vessels in Escalation of Sanctions Enforcement
Escalating Middle East Conflict Seen as Major Threat to UK Economic Stability
Early Challenges Mark Prince Harry and Meghan’s Australia Visit
UK Government Rejects Cover-Up Claims After Theft of Former PM Aide’s Phone
Cyprus Opens Strategic Talks with UK Over Sovereign Base Areas
UK Faces Risk of Sharp Inflation Surge Despite Stable Pre-Crisis Figures
UK Police Arrest Two Over Suspected Antisemitic Arson as Iran Link Investigated
UK Inflation Holds at Three Percent Ahead of Oil Price Shock from Iran Conflict
UK Fuel Prices Face Upward Pressure as Global Oil Trends Raise Cost Outlook
Girlguiding UK Sets September Deadline for Membership Policy Change Affecting Trans Participants
Germany and UK Accelerate Wind Power Expansion to Strengthen Energy Security
UK Moves to Ban Cryptocurrency Donations to Political Parties Over Foreign Influence Concerns
UK and Turkey Finalise Major Air Defence Agreement Worth Billions
Apple Introduces Mandatory Age Verification for iPhone Users in the UK
Diverging Views Emerge Over Meghan Markle’s Planned Australia Appearance
Trump Signals Frustration with UK Leadership Amid Diverging Approaches to Iran Conflict
UK Government Takes Control of Hunterston B as Landmark Nuclear Decommissioning Begins
UK Public Inflation Expectations Jump Sharply in March, Raising Pressure on Bank of England
×