Business secretary points finger at interest rates, not UK’s economic policies under Truss and Kwarteng
Business secretary Jacob Rees-Mogg walks outside Number 10 Downing Street, in London, Britain, September 7 2022. Picture: JOHN SIBLEY/REUTERS
But, on Wednesday, Rees-Mogg pointed the finger of blame at the 50-basis point rise in interest rates on September 22 — which failed to keep pace with the US Federal Reserve’s 75-basis points increase a day earlier — as the cause. Markets are worried about consistency because fiscal and monetary policy are moving in opposite directions, Sanjay Raja, chief UK economist at Deutsche Bank, told parliament’s treasury committee on Wednesday. Kwarteng’s September 23 statement was “the straw that broke the camel’s back”, he said.
Speaking to the treasury committee, Resolution Foundation chief Torsten Bell said it was precisely because of higher global interest rates that the UK government’s economic approach is the wrong one. “It’s very clear there’s a very UK-specific element to what’s going on” in financial markets, he said.Truss has already been forced to backtrack on one of the flagship measures announced by Kwarteng — a plan to scrap the highest rate of income tax, levied on the country’s top earners.
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