LIZ Truss today vowed she would stick to her promise not to slash public spending – despite spiralling borrowing and chaos over balancing the books.
The PM insisted today that she stuck by her campaign trail promises not to make cuts to budgets.
She told MPs at PMQs this lunchtime she will be "absolutely" sticking to her pledge.
She added: "We are spending almost £1tn of public spending. We were spending £700bn back in 2010.
"What we will make sure is that over the medium-term the debt is falling.
"But we will do that not by cutting public spending, but by making sure we spend public money well."
But it leaves her boxed into a corner and unable to say how her huge tax cuts will be paid for.
She is due to borrow £45billion for them, plus another £60billion for the mammoth energy bail out – insisting it will be paid back over time with higher growth.
But the mini Budget announcement spooked the financial markets, who are concerned about the long term costs of borrowing.
It forced the Bank of England to intervene to stop the pensions industry from collapsing – pumping in billions to buy long-term gilts.
Experts at the Institute for Fiscal Studies have suggested a staggering £60billion in cuts a YEAR might have to be revealed to balance the books.
Even by not lifting budgets in line with inflation, as government insiders expect to happen, this would leave her with huge holes to fill.
Chancellor Kwasi Kwarteng is set to reveal his medium term financial plans on October 31 – including an independent assessment from the Office for Budget Responsibility of how their plans will affect the economy.
He brought the date forward after the market chaos caused by the mini Budget – which came with no assessments of what the plans would mean.
Most read in News Money
Mortgage warning as BoE says millions will struggle at level not seen since 2008
McDonald's menu gets major UK change with new permanent burger popular in US
Electricity bills to be cut next year to separate them from sky-high gas prices
Mortgage rates rise & pound & pension funds hit as BoE steps in again
IFS director Paul Johnson said yesterday: "The chancellor says he wants to get the public finances on a sustainable basis. It looks to us like that's going to mean tens of billions of pounds of spending cuts in order to achieve that."
And it comes after Party Chair, Jake Berry, insisted the PM would have to look to "trim the fat" to save money.
He said on the first day of the party's Birmingham bash that ministers had agreed that departments will have to make savings to help balance the books.
Mr Berry told Sky's Sophy Ridge: "What we’ve heard from the government is that there is going to be a drive to trim fat in terms of government expenditure..
"Everyone will accept that there are efficiencies that can be found."
Source: Read Full Article