LONDON, Oct 18 (Reuters) – British Prime Minister Liz Truss has warned of tough times ahead after scrapping her sweeping tax cut plan and said she will try to keep the economy strong, despite calls for her resignation.
After weeks of investors blaming “global headwinds” for pushing the pound and government bonds, Truss said on Monday he regretted going “too fast” with his aggressive economic plan.
It is unclear whether the apology will assuage a growing rebellion in her Conservative Party, with some lawmakers urging Trudeau to step down just six weeks after becoming prime minister.
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Truss said he would fight on and told his top ministers he wanted to level with the public that tough times were ahead.
A new YouGov poll found that even among Conservative Party members who supported her as prime minister, more than half said she should resign. A third wanted his predecessor Boris Johnson to return.
Markets, which slumped after Truss’ September 23 “mini-budget”, are still under pressure after her Finance Minister Jeremy Hunt tore up her plans on Monday.
“I want to take responsibility and I’m sorry for the mistakes,” Truss told the BBC late on Monday.
“I wanted to act to help people with their energy bills to deal with the problem of high taxes, but we’ve gone too far and too fast.” Truss said he was “sticking it out” and would take the Conservatives to the next election in the next two years, although the statement was met with a laugh.
On Monday, Truss watched quietly in parliament as Hunt tore up his proposed plan less than a month later, and it sent a bond market so deep that the Bank of England had to act to prevent pension funds from collapsing.
‘honest’
For some in the party, seeing a prime minister humbled in Parliament does not give him hope that he can fight back.
James Heapy, minister for the armed forces, said Truss, his boss, could do no more wrong.
Truss was due to address her Brexit-backing lawmakers later, who were angry that she had abandoned her tax cut drive. Parliamentarians have been urged by the government to halt any move to oust him before presenting his medium-term fiscal plan on October 31.
“The prime minister said he wanted to be honest with the public that times would be difficult, but by addressing the long-term issues, we could put the country on a stronger path to the future,” his spokesman told ministers on Tuesday. .
Truss was elected by members of the Conservative Party, not by the wider electorate, on a promise to cut taxes and regulations to fuel the economy in what critics call a return to the Thatcherite-style “trickle-down” economy of the 1980s.
But markets reacted more dramatically, with borrowing costs rising, lenders pulling mortgage offers and pension funds falling into recession.
Ryanair (RYA.I) Boss Michael O’Leary described Britain’s economic situation as a “car crash”, which he blamed on the country’s decision to vote to leave the European Union in 2016.
Spending squeezes
With Britain’s economic reputation in tatters and inflation on the rise, Hunt will now have to go further in finding the government’s public spending cuts if Truss does not unleash his economic plan at a time when inflation is rising.
A spokeswoman for Truss said the government was not yet able to make commitments on individual policy areas, despite earlier pledges, but it was focusing on protecting the most vulnerable. He said Truss stood by his pledge to increase defense spending by 2030.
Torsten Bell, chairman of the Resolution Foundation, a think tank, said the government may need to cut public spending by around 30 billion pounds ($34 billion) – a politically more difficult task after successive Conservative governments slashed departmental budgets over the past 10 years. .
Hunt said Truce’s two-year energy support package, expected to cost more than £100 billion, was already part of the way to go and would last until April before being reviewed.
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By Kate Holden and Elizabeth Piper; Additional reporting by William James, Andrew MacAskill, Kylie MacLellan, and Paul Sandle; Editing by Raisa Kasolowski, Gareth Jones and Tomasz Janowski
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