Pound – live: Ex-Bank of England deputy says Truss tax cuts behind market turmoil

“Difficult decisions” will need to be taken despite Liz Truss ruling out public spending cuts, No 10 has said.

The PM’s official spokesman said: “The prime minister was clear that government spending will continue to rise but beyond that it really is for the chancellor to come forward with anything on spending which he will do on the 31st.”

Asked if the energy support scheme could be used as cover for departmental cuts, he said: “We are clear there will need to be difficult decisions to be taken given some of the global challenges we’re facing. I appreciate the interest but I’m not going to get drawn into what those might look like.”

Pressed whether spending will be in line with inflation, he said: “Future spending will be for the chancellor to set out.

“Public spending is due to rise, that will continue, but there will be decisions for the chancellor on spending in the round.”

He described a question on what will happen if the desired economic growth does not materialise as a “big hypothetical”.

The boss of the Port of Dover has warned that the new EU Entry-Exit System could cause “significant and continued disruption for a very long time”.

Doug Bannister, chief executive of the UK’s busiest ferry port, told MPs at Wednesday’s Transport Select Committee meeting that seven months before the proposed introduction of new biometric checks, the port does not know the rules and procedures that will apply.

The Brexit withdrawal agreement made United Kingdom a “third country” with strict controls on entry and exit. At Dover, frontier controls are “juxtaposed” with French officials conducting checks on British soil.

Our travel correspondent Simon Calder reports:

Liz Truss believes the Governor of the Bank of England Andrew Bailey is doing a good job, No 10 has said.

Business secretary Jacob Rees-Mogg appeared to criticise the Bank when he said recent turmoil in the markets was down to higher interest rates in the US rather than chancellor Kwasi Kwarteng’s mini-budget.

Asked if the PM believed Mr Bailey was doing a good job, her official spokesman said: “Yes. You have seen the Bank of England make a number of interventions recently.

“There are complex global issues at play which do feed into this.”

Asked about Mr Rees-Mogg’s comments, the spokesman said the business secretary was “giving some context to these global challenges”.

Gerard Lyons – an economist who has adviser to Liz Truss – said it is incorrect to suggest the mini-Budget was the sole cause of the market turmoil, but admitted the government did “misread” the situation.

He told BBC Radio 4’s World at One programme: “We should also be asking ourselves, why were markets so febrile ahead of the mini-budget? Why was the Bank of England seen by the markets as being so far behind the curve in terms of controlling inflation?”

Lyons added: “So, I think there are a whole combination of factors, but at the same time one has to say that the mini-budget itself did misread the situation.”

Mr Lyons said that chancellor Kwasi Kwarteng now needed a “clear plan that’s credible, that shows the ratio of debt to GDP coming down in time”.

Tory MP Kevin Hollinrake, another member of the Treasury select committee, said it would be better for Kwasi Kwarteng to U-turn on some tax plans than spur further market turmoil.

Speaking to BBC Radio 4’s World at One programme, he said that he believed the chancellor could survive such an embarrassing reversal, even if it did not “augur well”.

Hollinrake pointed to the planned hike in corporation tax as one potential option for a U-turn – saying the markets will want to see “something more tangible” to balance the books.

“I think it’s better to have looked at this more carefully … and say ‘I think we’ve got some of this wrong and these tax cuts need to be introduced over time’.”

Senior Tory MP Mel Stride said in the Commons that the chancellor may “simply have to come forward with a further rowing back of the tax announcements” – asking Treasury minister Chris Philp whether that possibility is still “on the table”.

Mr Philp said there are “not any plans to reverse any of the tax measures announced in the growth plan” – but said the chancellor would spell out exactly how he would balance the books on 31 October.

Shadow chancellor Rachel Reeves has compared the “unfunded tax cuts” in the mini-Budget to a bonfire spreading out of control, likening the Tories to pyromaniacs.

“It was built and then set ablaze by a Conservative Party totally out of control. Not disruptors, but pyromaniacs. And that fire has now spread,” she said.

Ahead of the ending of the Bank of England’s emergency bond-buying operations this Friday, Ms Reeves asked what the government would do to protect people’s pensions.

Tory Treasury minister Chris Philp said: “The fundamentals of the UK’s economy remain resilient.”

Met with laughter and jeers from Labour benches, the minister said the government had a plan for growth and that “we intend to do this in a way that is fiscally responsible”.

A leading economist says he is sceptical about the Government’s target of hitting 2.5% annual economic growth, saying that will be “almost impossible” within five years.

Deutsche Bank’s chief UK economist, Sanjay Raja, suggested the markets would expect a “down payment” to show how the Government intends to control finances, suggesting that spending cuts or tax rises in the order of £20 billion – £30 billion will be needed as an initial step.

The Institute for Fiscal Studies has suggested that a “fiscal tightening” of £62 billion in 2026-27 will be needed to stabilise debt levels – meaning either tax rises or spending cuts.

“All options are open” over whether to have a bank holiday to mark the coronation, says Downing Street.

Buckingham Palace’s announcement that King Charles III will be crowned on Saturday 6 May has sparked calls for a special day off, writes Andrew Woodcock: