Chancellor Kwasi Kwarteng is to reveal the government’s “fiscal plan” on 23 November, the Treasury has said amid market panic over borrowing-fuelled tax cut spree.
The government said the statement would include details on the new approach to borrowing, spending and tax-raising rules, including a pledge to ensure debt falls as a share of GDP in the “medium term”.
The Treasury also confirmed that there will not now be another Budget until spring 2023, following the highly-controversial “growth plan” set out by Mr Kwarteng last week.
The independent Office for Budget Responsibility (OBR) will publish its updated forecast for the economy in November, following by another forecast in the spring.
The pound plummeted to its lowest level against the dollar for 50 years on Monday, as Labour accused Liz Truss and Mr Kwarteng of acting like “gamblers in a casino chasing a losing run”.
It come as Bank of England governor Andrew Bailey warned that it is ready to hike interest rates “by as much as needed” to rein in inflation.
The pound fell as low as $1.032 before rallying to about $1.08 in London afternoon trading. Paul Donovan, chief economist of UBS Global Wealth Management, said investors seemed to view Tory party as “a doomsday cult”.
Mr Kwarteng told reporters he was not “not going to make any comment now” in reaction to the market panic, as No 10 also said Ms Truss would not be responding.
But the Treasury said ministers would be setting out further “supply side” plans for the economy in October, including changes to the planning system, business regulations, immigration and agricultural productivity.
The Treasury also announced that the government would be “sticking to spending settlements” for this spending review period – raising fears of a return to austerity and billions in cuts for the public sector.
Former Tory chancellor George Osborne – who has urged the government to end the “schizophrenic” policy of slashing taxes and increasing borrowing – welcomed the November update from the OBR.
“Good to see the government now taking steps to recognise the value of the UK’s central economic policy bodies – crucial to credibility,” he tweeted.
But other senior Tories were more critical. Mel Stride, chair of the Treasury select committee, has been scathing about the lack of a OBR update and detailed fiscal plan from the government.
On Monday, Mr Stride suggested the chancellor had been wrong on Sunday to signal further tax cuts “to come”. He tweeted: “It would be wise to take stock of how through time the markets weigh up recent economic announcements rather than immediately signalling more of the same in the near term.”
Tory grandee Ken Clarke told the BBC on Monday that the mini-budget had “put at risk” the party’s “reputation for being competent” – having compared cutting taxes for the rich to Latin American government.
The ex-chancellor said Margaret Thatcher would have disapproved of cutting taxes while “borrowing a lot of money” to pay for it. “I don’t believe Margaret would have approved of the budget,” said Mr Clarke.
Mr Kwarteng is expected to revise the government’s fiscal rules to accommodate his and Ms Truss’s radical bid to grow the economy through borrowing-fuelled tax cuts.
One of the four existing fiscal rules set demands that debt is course to fall as a proportion of GDP by the end of the spending review period in April 2025.
