A Tory MP has accused Liz Truss and Kwasi Kwarteng of “inept madness” as the financial turmoil sparked by last week’s mini-budget continued.
Simon Hoare compared the economic meltdown to Black Wednesday in 1992, when interest rates soared and Sterling fell out of the European Exchange Rate Mechanism.
The value of the pound has plummeted since last Friday’s fiscal event, in which the chancellor slashed taxes for the rich as part of the government’s plan to grow the economy.
In an surprise move, the Bank of England was today forced to launch an emergency government bond-buying programme prevent a “material risk to UK financial stability”.
The International Monetary Fund also made an unprecedented intervention by urging the UK to “re-evaluate” its tax cuts —saying it does “not recommend large and untargeted fiscal packages” when inflation is spiking across the world.
Writing on Twitter, Hoare said the causes of the crisis “were authored” in the Treasury.
In a nod to the pressure Kwarteng is under to reverse the tax cuts, Hoare said: “This inept madness cannot go on.”
Hoare’s concerns were also echoed by Tory MP Robert Largan, who said it was a “mistake” for Truss to abolish the 45p top rate of tax — the most controversial measure in last Friday’s mini budget.
In a Twitter thread the High Peak MP said that while he agreed with a separate decision to reduce the basic rate of income tax from 20p to 19p, he disagreed with abandoning the top rate of tax entirely.
“Considering the government’s plan for growth, there are a number of measures that I welcome,” he said.
“In particular, the announcement that the basic rate of income tax will be cut from 20 per cent to 19 per cent from next April.
“Thirty-one million taxpayers will benefit from this tax cut, with someone on an average salary saving £170 per year. This comes on top of the significant increase to the national living wage and the triple-lock which will ensure a substantial increase in pensions this year.
“However, I have serious reservations about a number of announcements made by the chancellor.
“I do not believe that cutting the 45p top tax rate is the right decision when the government’s fiscal room for manoeuvre is so limited. In my view, this is a mistake.”
The economic situation has become so serious that Truss and Kwarteng are facing calls to recall parliament - which is in recess until October 11 - in an attempt to address the crisis.
Labour’s shadow chancellor Rachel Reeves said Kwarteng “must make an urgent statement on how he is going to fix the crisis that he has made”.
Liberal Democrat leader Sir Ed Davey added: “Liz Truss has 24 hours to fix this economic disaster and prevent people losing their homes.
“Now is the time for the prime minister to recall parliament to reassure not just the financial markets, but also British homeowners at risk of higher mortgage costs.”
Kwarteng is due to speak at the Tory conference in Birmingham on Monday but is coming under pressure to address the nation before then.
He has not spoken publicly since Sunday, when he hinted at further tax cuts, a move which led to the pound reaching its lowest ever value against the US dollar.
Despite the backlash, Kwarteng “underlined the government’s clear commitment to fiscal discipline” at a meeting held with top City banks.
According to a read-out of the meeting, published by the Treasury, Kwarteng also reiterated that he was “working closely” with the governor of the Bank of England and the Office for Budget Responsibility ahead of delivering his medium-term fiscal plan on November 23.
The statement added: “The chancellor also discussed with attendees how last Friday’s growth plan will expand the supply side of the economy through tax incentives and reforms, helping to deliver greater opportunities and bear down on inflation.”