London Daily

Focus on the big picture.
Wednesday, Sep 17, 2025

Truss toils to stop UK market turmoil from turning into economic tailspin

Truss toils to stop UK market turmoil from turning into economic tailspin

Liz Truss faced her first Prime Minister's Questions in parliament on Wednesday since her government's mini-budget sent markets into turmoil, borrowing costs rising, and ratings plunging in a disastrous first month in office.
It comes amid more bad news on the financial and economic fronts despite government efforts — and U-turns — to try to halt the slide since Chancellor (finance minister) Kwasi Kwarteng announced his plan for unfunded tax cuts.

The pound fell again against the dollar early on Wednesday after the Bank of England said it would not extend its debt-buying intervention to stabilize financial markets.

Meanwhile, official figures show the UK economy shrank unexpectedly in August, reinforcing fears of an impending recession.

As the government struggles to steady the listing ship, the UK's international reputation has taken a hammering. Investors are wary and the International Monetary Fund (IMF) has repeated rebukes for fiscal mismanagement.

Wednesday's report by the Office for National Statistics (ONS) shows there was a 0.3% fall in Gross Domestic Product (GDP) in August from the previous month, while July's increase in output was revised down to 0.1% from a previous estimate of 0.2%.

A decline in manufacturing caused production to fall, while services also slumped.

"Many other consumer-facing services struggled, with retail, hairdressers and hotels all faring relatively poorly," ONS Chief Economist Grant Fitzner said.

Some analysts say the figures show the rapid increase in prices is having an impact on consumer spending, compounding the cost-of-living crisis. A further sharp slowdown is expected as surging inflation hits households and rising interest rates put mortgages up.

The Bank of England (BoE) confirmed on Wednesday that it would stop supporting the bond market on Friday — having intervened to bring stability and support pension funds in the wake of the mini-budget. Governor Andrew Bailey said on Tuesday that pension funds now had to manage their own affairs and "sort it out".

However, there have been signs of mixed messages from the BoE, with the Financial Times reporting that its buying program could continue depending on market conditions.

This week's disclosure of the lowest unemployment rate since 1974 offered cold comfort, revealing a record exodus of people from the labor market and raising fears that the shrinking workforce will further fuel inflation.

The government's economic plan sparked market upheaval amid serious concerns over how it would fund the tax cuts, given its other obligations including a commitment to a massive energy support program.

The turmoil has prompted Liz Truss' government to take emergency action to plug the holes in public finances and stabilize the markets.

Late on Tuesday, it said that renewable power companies in England and Wales would face what has been described as a windfall tax from early next year.

On Monday the Chancellor said he would release the government’s detailed fiscal plans on Oct. 31, three weeks earlier than scheduled. This follows an earlier move to ditch a plan to scrap the top 45% rate of income tax.

The government's failure to detail how it will pay for its tax cuts — except to say faster economic growth will increase tax revenue — has been blamed for the rollercoaster ride on the markets.

Truss told the House of Commons on Wednesday that she would not cut public spending, but the government would make sure that public money was spent well.

Business Secretary Jacob Rees-Mogg caused astonishment on Wednesday morning by blaming the recent turmoil on interest rates, not the government's mini-budget. He also refused to accept that the action taken on renewable energy amounts to a windfall tax — prompting withering criticism from the opposition Labour Party.

"Such ludicrous evasion simply further erodes confidence in a government that looks like it is totally clueless," tweeted Labour's climate spokesman Ed Miliband.

Truss took office promising a radical shake-up of economic policy and challenging establishment orthodoxy. She told last week's Conservative Party conference that she would prioritize "growth, growth, growth".

At the outset, she promised to do this through tax cuts and deregulation.

But the market and economic turmoil has brought a series of U-turns and massively reduced the government's room for maneuver.

Some of the strongest criticism has come from Truss' own backbench MPs, a majority of whom did not support her in the summer leadership contest.

Many believe her economic ultra-liberalism is at odds with the Conservatives' 2019 manifesto pledges under previous leader Boris Johnson to "level up" Britain's poorer areas.

Leading voices spoke up against the tax-cutting plan, and the prime minister's refusal to commit to increasing benefits in line with inflation has brought rumblings of further rebellion.

Opinion polls have given Labour a lead of over 30 percentage points, and the latest YouGov assessment puts the government's public approval rating at only 13%, with 70% expressing disapproval of its performance.
Newsletter

Related Articles

0:00
0:00
Close
New OpenAI Study Finds Majority of ChatGPT Use Is Personal, Not Professional
Hong Kong Industry Group Calls for HK$20 Billion Support Fund to Ease Property Market Stress
Joe Biden’s Post-Presidency Speaking Fees Face Weak Demand amid Corporate Reluctance
Charlie Kirk's murder will break the left's hateful cancel tactics
Kash Patel erupts at ‘buffoon’ Sen. Adam Schiff over Russiagate: ‘You are the biggest fraud’
Homeland Security says Emmy speech ‘fanning the flames of hatred’ after Einbinder’s ‘F— ICE’ remark
Charlie Kirk’s Alleged Assassin Tyler Robinson Faces Death Penalty as Charges Formally Announced
Actor, director, environmentalist Robert Redford dies at 89
The conservative right spreads westward: a huge achievement for 'Alternative for Germany' in local elections
JD Vance Says There Is “No Unity” with Those Who Celebrate Charlie Kirk’s Killing, and he is right!
Trump sues the 'New York Times' for an astronomical sum of 15 billion dollars
Florida Hospital Welcomes Its Largest-Ever Baby: Annan, Nearly Fourteen Pounds at Birth
U.S. and Britain Poised to Finalize Over $10 Billion in High-Tech, Nuclear and Defense Deals During Trump State Visit
China Finds Nvidia Violated Antitrust Laws in Mellanox Deal, Deepens Trade Tensions with US
US Air Force Begins Modifications on Qatar-Donated Jet Amid Plans to Use It as Air Force One
Pope Leo Warns of Societal Crisis Over Mega-CEO Pay, Citing Tesla’s Proposed Trillion-Dollar Package
Poland Green-Lights NATO Deployment in Response to Major Russian Drone Incursion
Elon Musk Retakes Lead as World’s Richest After Brief Ellison Surge
U.S. and China Agree on Framework to Shift TikTok to American Ownership
London Daily Podcast: London Massive Pro Democracy Rally, Musk Support, UK Economic Data and Premier League Results Mark Eventful Weekend
This Week in AI: Meta’s Superintelligence Push, xAI’s Ten Billion-Dollar Raise, Genesis AI’s Robotics Ambitions, Microsoft Restructuring, Amazon’s Million-Robot Milestone, and Google’s AlphaGenome Update
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Musk calls for new UK government at huge pro-democracy rally in London, but Britons have been brainwashed to obey instead of fighting for their human rights
Elon Musk responds to post calling for the murder of Erika Kirk, widow of Charlie Kirk: 'Either we fight back or they will kill us'
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
USA: Office Depot Employees Refused to Print Poster in Memory of Charlie Kirk – and Were Fired
Proposed U.S. Bill Would Allow Civil Suits Against Judges Who Release Repeat Violent Offenders
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
French Debt Downgrade Piles Pressure on Macron’s New Prime Minister
US and UK Near Tech, Nuclear and Whisky Deals Ahead of Trump Trip
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
Anesthesiologist Left Operation Mid-Surgery to Have Sex with Nurse
Tens of Thousands of Young Chinese Get Up Every Morning and Go to Work Where They Do Nothing
The New Life of Novak Djokovic
The German Owner of Politico Mathias Döpfner Eyes Further U.S. Media Expansion After Axel Springer Restructuring
Suspect Arrested: Utah Man in Custody for Charlie Kirk’s Fatal Shooting
In a politically motivated trial: Bolsonaro Sentenced to 27 Years for Plotting Coup After 2022 Defeat
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Turkish authorities seize leading broadcaster amid fraud and tax investigation
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
ChatGPT CEO signals policy to alert authorities over suicidal youth after teen’s death
The British legal mafia hit back: Banksy mural of judge beating protester is scrubbed from London court
Surpassing Musk: Larry Ellison becomes the richest man in the world
Embarrassment for Starmer: He fired the ambassador photographed on Epstein’s 'pedophile island'
Manhunt after 'skilled sniper' shot Charlie Kirk. Footage: Suspect running on rooftop during panic
Effective Protest Results: Nepal’s Prime Minister Resigns as Youth-Led Unrest Shakes the Nation
Qatari prime minister says Netanyahu ‘killed any hope’ for Israeli hostages
×