An official inquiry has been demanded into reports that Kwasi Kwarteng attended a drinks party with hedge fund managers just hours after his mini-budget.
The chancellor is said to have been encouraged to cut more taxes as part of the government’s attempts to boost economic growth.
It is also alleged that some of those in attendance stood to gain from the falling value of the pound, which reached its lowest ever recorded value against the dollar last week.
The champagne reception reportedly took place at the west London home of Andrew Law, a financier and Conservative Party donor, on September 23 - just hours after the mini-budget.
According to The Sunday Times, Kwarteng was urged at the gathering to “double down” on his plans to reduce the slash taxes and reduce state regulation.
Two days later, the chancellor said told the BBC there was “more to come” following his decision to scrap the 45p income tax rate paid by the highest earners, cut stamp duty, reverse the rise in national insurance and cancel a planned rise in corporation tax.
Sarah Olney, the Lib Dem Treasury spokesperson, said: “While struggling homeowners saw their mortgage bills spiral, it seems the chancellor was sipping champagne with hedge fund managers profiting from the falling pound.
“How out of touch can you get. We need an official inquiry into this now.”
A source close to the chancellor said: “Any suggestion attendees had access to privileged information is total nonsense.
“The Growth Plan published last Friday included a commitment to review our tax code to make it simpler, better for families and more pro-growth. The government’s ambitions on lowering the tax burden are hardly a state secret.”
The row comes as the Conservative Party conference kicks off in Birmingham, with the economic turmoil caused by the mini-budget leading to a Labour surge in the polls.
Liz Truss, who endured a disastrous round of local radio interviews on Thursday morning, is sure to be grilled on the controversy surrounding her chancellor when she is interviewed by Laura Kuenssberg on Sunday morning.