London Daily

Focus on the big picture.
Wednesday, Dec 03, 2025

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
UK Plans Major Cutback to Jury Trials as Crown Court Backlog Nears 80,000
UK Government to Significantly Limit Jury Trials in England and Wales
U.S. and U.K. Seal Drug-Pricing Deal: Britain Agrees to Pay More, U.S. Lifts Tariffs
UK Postpones Decision Yet Again on China’s Proposed Mega-Embassy in London
Head of UK Budget Watchdog Resigns After Premature Leak of Reeves’ Budget Report
Car-sharing giant Zipcar to exit UK market by end of 2025
Reports of Widespread Drone Deployment Raise Privacy and Security Questions in the UK
UK Signals Security Concerns Over China While Pursuing Stronger Trade Links
Google warns of AI “irrationality” just as Gemini 3 launch rattles markets
Top Consultancies Freeze Starting Salaries as AI Threatens ‘Pyramid’ Model
Macron Says Washington Pressuring EU to Delay Enforcement of Digital-Regulation Probes Against Meta, TikTok and X
UK’s DragonFire Laser Downs High-Speed Drones as £316m Deal Speeds Naval Deployment
UK Chancellor Rejects Claims She Misled Public on Fiscal Outlook Ahead of Budget
Starmer Defends Autumn Budget as Finance Chief Faces Accusations of Misleading Public Finances
EU Firms Struggle with 3,000-Hour Paperwork Load — While Automakers Fear De Facto 2030 Petrol Car Ban
White House launches ‘Hall of Shame’ site to publicly condemn media outlets for alleged bias
UK Budget’s New EV Mileage Tax Undercuts Case for Plug-In Hybrids
UK Government Launches National Inquiry into ‘Grooming Gangs’ After US Warning and Rising Public Outcry
Taylor Swift Extends U.K. Chart Reign as ‘The Fate of Ophelia’ Hits Six Weeks at No. 1
250 Still Missing in the Massive Fire, 94 Killed. One Day After the Disaster: Survivor Rescued on the 16th Floor
Trump: National Guard Soldier Who Was Shot in Washington Has Died; Second Soldier Fighting for His Life
UK Chancellor Reeves Defends Tax Rises as Essential to Reduce Child Poverty and Stabilise Public Finances
No Evidence Found for Claim That UK Schools Are Shifting to Teaching American English
European Powers Urge Israel to Halt West Bank Settler Violence Amid Surge in Attacks
"I Would Have Given Her a Kidney": She Lent Bezos’s Ex-Wife $1,000 — and Received Millions in Return
European States Approve First-ever Military-Grade Surveillance Network via ESA
UK to Slash Key Pension Tax Perk, Targeting High Earners Under New Budget
UK Government Announces £150 Annual Cut to Household Energy Bills Through Levy Reforms
UK Court Hears Challenge to Ban on Palestine Action as Critics Decry Heavy-Handed Measures
Investors Rush Into UK Gilts and Sterling After Budget Eases Fiscal Concerns
UK to Raise Online Betting Taxes by £1.1 Billion Under New Budget — Firms Warn of Fallout
Lamine Yamal? The ‘Heir to Messi’ Lost to Barcelona — and the Kingdom Is in a Frenzy
Warner Music Group Drops Suit Against Suno, Launches Licensed AI-Music Deal
HP to Cut up to 6,000 Jobs Globally as It Ramps Up AI Integration
MediaWorld Sold iPad Air for €15 — Then Asked Customers to Return Them or Pay More
UK Prime Minister Sir Keir Starmer Promises ‘Full-Time’ Education for All Children as School Attendance Slips
UK Extends Sugar Tax to Sweetened Milkshakes and Lattes in 2028 Health Push
UK Government Backs £49 Billion Plan for Heathrow Third Runway and Expansion
UK Gambling Firms Report £1bn Surge in Annual Profits as Pressure Mounts for Higher Betting Taxes
UK Shares Advance Ahead of Budget as Financials and Consumer Staples Lead Gains
Domino’s UK CEO Andrew Rennie Steps Down Amid Strategic Reset
UK Economy Stalls as Reeves Faces First Budget Test
UK Economy’s Weak Start Adds Pressure on Prime Minister Starmer
UK Government Acknowledges Billionaire Exodus Amid Tax Rise Concerns
UK Budget 2025: Markets Brace as Chancellor Faces Fiscal Tightrope
UK Unveils Strategic Plan to Secure Critical Mineral Supply Chains
UK Taskforce Calls for Radical Reset of Nuclear Regulation to Cut Costs and Accelerate Build
UK Government Launches Consultation on Major Overhaul of Settlement Rules
Google Struggles to Meet AI Demand as Infrastructure, Energy and Supply-Chain Gaps Deepen
Car Parts Leader Warns Europe Faces Heavy Job Losses in ‘Darwinian’ Auto Shake-Out
×