Liz Truss’s disastrous mini-budget cost the country a staggering £30bn – doubling the sum that the Treasury says will have to be raised by Jeremy Hunt this week in a huge programme of tax rises and spending cuts.
Toby Helm www.theguardian.com (Extract)
The independent Resolution Foundation calculates that the Truss government was responsible for about £30bn of the fiscal hole which the Treasury puts at £60bn, and which Hunt will have to tackle in the autumn statement on Thursday.
The thinktank also says the £30bn figure would have been far higher without the U-turns already taken by Hunt on the Truss plans.
The RF’s economists estimate that in her seven-week premiership £20bn was blown by Truss and her chancellor Kwasi Kwarteng on unfunded cuts to national insurance and stamp duty, with a further £10bn added by higher interest rates and government borrowing costs as the markets reacted with dismay to the former prime minister’s dash for growth.
The rest of the fiscal hole, the RF says, can be accounted for by unexpectedly bad economic conditions, which have meant lower growth and lower tax receipts to the Treasury.
The estimates of the cost of “Trussonomics” will intensify a bitter blame game now being played out at the top of the Tory party.
While many Conservative MPs will be angered by more tax rises, the chancellor is expected to make clear that he is, in large part, having to repair damage caused by the last occupant of No 10, who was backed by many rightwing Tory MPs.
Last week Kwarteng tried to excuse himself for some of the blame, saying he had told Truss to “slow down” and warned her that she would only survive for two months in Downing Street if she pressed ahead with her full tax-cutting agenda.In an interview with the Sunday Times, Hunt says Truss was right to want to grow the economy, but wrong to do so without making sure tax cuts were funded. “We’ve corrected those mistakes very quickly and, you know, I think we understand how it is very, very important that … alongside any plan you demonstrate that we’re a country that will pay its way,” he said.