Liz Truss has claimed there is no need to “balance the books prematurely” after the Bank of England hiked interest rates from 1.25 per cent to 1.75 per cent, the biggest increase for 27 years.
Speaking during the Tory leadership debate on Sky News, Ms Truss said her tax cuts would stimulate growth and help to repay public debt back in the long-term.
It comes after Governor Andrew Bailey forecast that the country would enter the longest recession since the financial crisis.
The Tory leadership hopefuls traded barbs in the run-up to Thursday’s debate, with Mr Sunak warning that his opponent’s plans to increase borrowing would “make high inflation and high prices last for longer, making everyone poorer”.
Ms Truss countered by saying the bleak forecast “underlines the need for the bold economic plan”, with Mr Sunak instead pledging to get inflation under control before enacting major tax cuts.
The Foreign Secretary, the bookmakers’ favourite to become the next prime minister, has also pledged to re-examine the Bank’s mandate to make sure it has a “tight enough focus on the money supply and on inflation”. One of her allies said she would consider whether the current arrangements are “fit for purpose”.
