Kwasi Kwarteng has pledged to continue the sweeping tax-cutting spree fueled by government borrowing despite growing calls to “reverse course” amid turbulent markets.
“We are confident in our long-term strategy to boost economic growth through tax cuts and supply-side reform,” the Chancellor said Tuesday during a meeting with banking and investment chiefs. .
Mr Kwarteng promised to produce a “credible plan” to reduce public debt on November 23 – but insisted he and Liz Truss would continue their search for growth.
“I am convinced that with our growth plan and the next medium-term budget plan – in close collaboration with the Bank – our approach will work,” he said. “It will be a credible plan to bring debt to GDP down.”
It comes as Virgin Atlantic chief executive Shai Weiss called on Ms Truss and Mr Kwarteng to ‘reverse course’ to end the perception of ‘unsustainable perceived weakness in international markets’.
The airline boss added: “Sometimes all of us in this room should be humble enough to say, ‘If I’ve done something that’s not working, maybe I should back off. It’s not a bad thing to do.
JP Morgan economist Allan Monks told Reuters that Mr Kwarteng should “reverse or reconsider” his strategy to prevent things from getting worse.
“There are still no clear signs that the source of the problem – the government’s fiscal strategy – is being reversed or reconsidered. This will have to happen before November to avoid a much worse outcome for the economy.
Former US Treasury chief Larry Summers said on Tuesday that markets were treating Britain as a developing country where “credibility” is lost after Friday’s borrowing-fueled tax cut plan.
Mr Kwarteng met with banking and investment chiefs – including Aviva, Legal and General, Royal London, BlackRock, Fidelity and JP Morgan – to discuss deregulation plans on Tuesday morning.
According to a record of the meeting, the chancellor told them that cabinet ministers will “establish more supply-side measures over the next few weeks”, and said “every department will be a growth department”.
German Finance Minister Christian Lindner questioned the “experimental” economic plan after Mr Kwarteng introduced a series of debt-fueled tax cuts, mainly benefiting the wealthy.
“In the UK, a major experiment begins as the state simultaneously puts its foot on the accelerator while the central bank brakes,” he said at an event on Monday evening, according to Bloomberg.
Meanwhile, Labor leader Sir Keir Starmer is facing calls to suspend MP Rupa Huq after he described Mr Kwarteng as “superficially” black.
In an audio posted online, Ms Huq can be heard discussing her elite educational background, before adding that “you wouldn’t know he was black” listening to him on the radio.
Conservative Party chairman Jake Berry expressed his ‘serious concerns’ in a letter to Sir Keir, the audio being posted by Guido Fawkes’ website shortly before his conference speech.