Watchdog to outline next week just how bad (or good) budget will be for UK
Prime Minister Lizz Truss and Chancellor Kwasi Kwarteng are set to release the UK’s financial forecast within days.
The PM and Chancellor sought to reassure markets they are serious about bringing down Britain’s debt, by meeting with the Office for Budget Responsibility (OBR) today.
The OBR has confirmed it will deliver an initial forecast to the Chancellor on October 7.
Following the meeting the Treasury said the PM and Chancellor would ‘work closely’ with the OBR in the coming weeks.
It also said they ‘value’ the watchdog’s scrutiny over the forthcoming plans.
In an unusual move the Prime Minister joined the Chancellor for an emergency meeting with OBR boss Richard Hughes after the Government’s £45 billion tax cutting plans sparked mayhem in financial markets.
Following the meeting the OBR said in a statement: ‘We discussed the economic and fiscal outlook, and the forecast we are preparing for the Chancellor’s medium-term fiscal plan.
‘We will deliver the first iteration of that forecast to the Chancellor on Friday October 7 and will set out the full timetable up to November 23 next week.
‘The forecast will, as always, be based on our independent judgment about economic and fiscal prospects, and the impact of the Government’s policies.’
Last week the Chancellor’s ‘mini-budget’ led to market turmoil, and in the wake of it new polls from YouGov published yesterday showed Labour had surged to a 33 point lead over the Tories – its biggest lead since the late 1990s.
Sir Charles Walker offered the starkest warning so far about the electoral peril his party was in, after a YouGov poll for The Times showed Labour opening up a massive 33-point lead over the Conservatives.
He admitted that his party would be ‘wiped out’ if an election was called tomorrow, but ruled out the possibility of a leadership challenge against Ms Truss.
‘If there was a General Election tomorrow, there won’t be but if there was, we would be wiped out… we would cease to exist as a functioning political party,’ he said.
Both the Prime Minister and the Chancellor have said they are still committed to the plan, arguing that their £45 billion package of tax cuts is the ‘right plan’ for the economy.
And while declining to comment directly on the economic created by the mini-budget, Ms Truss told a round of BBC local radio interviews that her administration had to take ‘urgent action’ to kick-start the economy and protect consumers from rising energy costs.
During a visit to an engine plant in Darlington, Mr Kwarteng said the package he announced in the Commons on Friday was ‘absolutely essential’ if the economy was to generate the revenues needed to fund public services.
Tories have also refused to rule out cutting benefits for the poorest in society to pay for tax cuts benefiting its richest.
Senior ministers have said scrapping a planned welfare uplift to ensure the system keeps pace with soaring inflation, isn’t off the cards, a move which would amount to a real-terms cut.
In May, then-chancellor Rishi Sunak committed to increasing benefits in line with CPI, which would ensure people who survive on government assistance will not be left behind by 10% inflation during the cost of living crisis.
But with the government scrambling to find £45bn for its tax proposals amid market chaos, that promise could now be scrapped.
Liz Truss is looking to reign in spending and is under pressure to credibly explain how she’ll pay for a tax giveaway which disproportionately helps wealthier households.
Despite the pound plunging to record lows and a crisis in the government bonds market, the prime minister has doggedly stuck by her plans.
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