The shockwaves from the mini-budget presented by Prime Minister Liz Truss and her Chancellor of the Exchequer Kwasi Kwarteng are still reverberating in the markets and politically more damaging, among members of the ruling Conservative party.
Amid the fallout, support for the Tories has plummeted, with YouGov putting the opposition Labour Party 33 points ahead. A survey by Opinium for the Observer newspaper showed three-quarters of UK voters, including 71% of those who backed the Tories in the last election, believe Truss and Kwarteng have “lost control” of the economy.
In effect cutting taxes for Britain’s highest earners is proving especially toxic among Tory MPs, who fear the accompanying government cost savings Truss and her ministers say are needed will play into the hands of Keir Starmer’s Labour.
Furthermore Liz Truss has said the controversial decision to remove the highest rate of UK income tax was taken by Chancellor Kwasi Kwarteng but she insisted her government is sticking with it despite market chaos.
Her defiance -- as the ruling Conservative Party’s annual conference begun in Birmingham on Sunday -- will further fuel anger among Tory MPs about her leadership and the economic policy she and Kwarteng are pursuing.
Former Cabinet Minister Michael Gove made clear he would not support the move to benefit the highest earners in Britain when the question is eventually put to Parliament. His views echo the criticism of many other Tory MPs who say the plan plays directly into the hands of the Labour Party, currently leading opinion polls by a huge margin.
But Truss made clear she is not backing down, and Conservative Party Chairman Jake Berry told Sky News that any Tory MP who voted against the measure would be kicked out of the parliamentary party.
In a BBC interview, Truss said her government should have “laid the ground better” for Kwarteng’s mini-budget announcement, but insisted: “I do stand by the package we announced.”
Yet her comment that it was Kwarteng who decided to remove the highest income tax band -- and that he did so without putting such a politically sensitive issue to Cabinet -- will raise eyebrows. By sticking with the plan, though, it appears unlikely Truss is considering cutting Kwarteng loose.
Traders drove to the pound to a record low in the aftermath of Kwarteng’s fiscal statement, government borrowing costs soared and the Bank of England to intervene to prevent a meltdown in the gilt market.