Kwasi Kwarteng is facing demands from his own party to act within days amid fears millions will face a steep hike in mortgage rates – with one senior Conservative MP describing last week’s mini-Budget as “an unmitigated disaster”.
Tory MPs called for swift action to restore investor confidence after the chancellor triggered turmoil in the markets and caused the pound to fall to a record low.
The IMF issued an extraordinary rebuke of his tax plans, urging a rethink and saying they would “increase inequality.”
And No 10 was also forced to deny claims of a split between Liz Truss and Mr Kwarteng over how to deal with the market reaction.
One senior Conservative backbencher described the mini-Budget as “the shortest suicide note in history”, a nod to the famous description of Labour’s 1983 election manifesto, telling The Independent it could be “an unmitigated disaster”.
The Tory disquiet could even be seen at Labour’s conference in Liverpool, where one frontbencher told The Independent he had received a text from an ex-minister in Boris Johnson’s government urging Labour to win the next election, signed “a patriot”.
Mr Kwarteng has vowed to push on with the government’s radical borrowing-fuelled £45bn tax cut spree despite growing calls to reverse course, and said he would produce a “credible plan” to reduce government debt.
“We are confident in our long-term strategy to drive economic growth through tax cuts and supply-side reform,” the chancellor said at a meeting with banking and investment chiefs on Tuesday.
But former Brexit secretary David Davis said Mr Kwarteng must act “pretty bloody soon – and certainly by the party conference”, which begins in Birmingham this weekend.
He accused Mr Kwarteng of doing “what the Americans call a ‘Hail Mary’ – throwing everything up in the air and hoping it works”.
“He has to give an idea of what the thinking is, there was no attempt to explain the thinking last week,” Mr Davis added.
Sir Bob Neill, the Tory MP who chairs the Commons justice committee, also said Mr Kwarteng had to move “very quickly” to restore confidence. He called on the chancellor to bring forward the mid-term fiscal plan set for November and think again about his surprise announcement that he was scrapping the top rate of tax, paid by those earning more than £150,000.
Senior economists also suggested more urgency was needed in the response to the crisis. Charlie Bean, the former deputy governor of the Bank of England, said he would have advised the Bank to call an emergency meeting.
Mr Kwarteng held a call with Tory MPs, as he sought to settle nerves in the wake of the market fallout. But Mel Stride, the Conservative chair of the Commons Treasury committee, warned the party’s reputation on the economy was “in jeopardy”.
In an interview, Conservative MP Kevin Hollinrake, also a member of the Commons Treasury committee, refused to rule out voting against the finance bill containing some of the government’s planned tax cuts.
One Tory MP told The Independent there could be a “big battle” over the plan to axe the top rate of income tax, suggesting up to 20 MPs could rebel on the issue. But another moderate backbencher played down the idea of a rebellion over tax cuts.
“You will lose the whip – any government that can’t carry its Budget is no longer a government. Losing moderate MPs will mean a further lurch to the right,” they said.
