Truss defends his economic plan as UK Tories gather

  • The Prime Minister defended the economic plan, saying it was the right one
  • And the party is trying to reassure the public
  • Kwarteng says he decided on a higher tax rate

Birmingham, England, Oct. 2 (Reuters) – British Prime Minister Liz Truss sought to reassure her party and the public on Sunday that she should have done more to “lay the groundwork” for an economic plan that has plunged the pound to a record low. And government borrowing costs will rise.

On the first day of her governing Conservative party’s annual conference, Truss, who has been in office for less than a month and is already under intense pressure, sought a softer tone, saying she would support the public through a tough winter and beyond.

He defended his “growth plan”, a package of tax cuts criticized by investors and many economists for costing tens of millions of pounds.

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Truss said it was the right direction, saying it did not fully explain to critics the depth of Britain’s problems and the urgency of the radical plan. Traders and investors rejected that argument as the pound fell last week and borrowing costs rose.

But some Conservative lawmakers worry it could hurt their chances in the 2024 election, with Truss not denying that the plan would require spending cuts to public services and refusing to increase welfare benefits in line with inflation, while endorsing tax cuts. For the rich.

Asked what she was doing to ease concerns in Britain about her plan’s impact on mortgages, debt and rent costs, Truss told the BBC: “I understand their concern about what happened this week,” she told the BBC in Middle English. City of Birmingham.

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“I stand by the package that we announced, and I stand by the fact that we announced it quickly because we had to act, but I accept that we should have laid the groundwork better.”

Jack Perry, the leader of the Conservative Party, admitted that he was not an economist and suggested that markets may have overestimated. “So we’ll see where the markets are in six months,” he told Sky News.

Trouble?

Truss was sworn in on September 6, but Queen Elizabeth died two days later, so the first days of the new prime minister’s term were largely taken up with a period of national mourning, when all politics were suspended.

He launched his plan two weeks after taking office, and his team feels he hinted at his plans during the leadership campaign against challenger Rishi Sunak, who has argued against immediate tax cuts.

But the scale of the unfunded cuts spooked markets. The pound recovered after a major sell-off after Britain’s central bank, the Bank of England, stepped in, but government borrowing costs remain markedly higher.

Investors say the government will have to work hard to restore confidence, and the BoE’s emergency bond purchases are only due to run until October 14, giving Truss little time.

That was not the backdrop he wanted for his first party conference as prime minister.

She arrived at the main hall to cheers and a standing ovation, but only half the seats were full, perhaps due to a weekend train strike but also a sign of unease over her package.

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Some in the party fear they will be seen as the “bad party”, cutting taxes for the rich while doing little to improve the lives of the most vulnerable.

In what could be a sign of things to come, Business Minister Jacob Rees-Mogg was booed by a dozen protesters who said he was “not welcome here” when he arrived at the convention centre. He had to be taken away by the police.

A former minister, Michael Gove, has long been at the heart of the government and rejected the party’s plans to abolish the 45% income tax. That policy was not made.

“It’s very difficult to argue that it’s right to cut welfare payments while cutting taxes for the rich,” Gove said at an event at the conference.

Truss argued the move was part of a simplification of the tax system, but said the decision on higher taxes was made by his finance minister Kwasi Kwarteng.

He also suggested that politicians spend too much time worrying about how their policies are received by the public, who he says are focused on driving growth.

But he struggled when pressed on whether the repeal of some taxes should be paid for with cuts to public services. Instead of denying this, he said he wants better services that provide value for money to taxpayers.

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Reporting by Elizabeth Piper and Andrew MacAskill; Additional reporting by Hannah McKay and Alistair Smout; Editing by Gareth Jones, John Harvey and Frances Kerry

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