Hunt hits back at Kwarteng’s attempt to play down mini-Budget

Chancellor Jeremy Hunt on Friday rejected his predecessor’s attempts to play down the impact of the shortlived “mini” Budget on the deteriorating UK economy.

Hunt criticised the failure of Kwasi Kwarteng and former prime minister Liz Truss to show how they would pay for unfunded tax cuts in the fiscal statement on September 23 that caused turmoil in the markets and triggered an intervention by the Bank of England.

The chancellor said the previous administration “didn’t show how we were going to bring our debts down over the medium term” and as a result the markets reacted negatively. “So we have learned that you can’t fund either spending or borrowing without showing how you are going to pay for it.”

His comments came after Kwarteng, who was sacked by Liz Truss three weeks after the “mini” Budget and just 38 days in the role, told TalkTV on Thursday evening that the “black hole and structural problems” within the economy were already apparent before his fiscal package. He added that Truss’s broader “strategic goal” of low taxes and high growth was correct.

Truss’s “mini” Budget included £45bn of unfunded tax cuts with measures ranging from cutting the basic rate of income tax from 20p in the pound to 19p to reversing a planned national insurance rise. The measures sparked turmoil in financial markets, sending sterling plunging and government borrowing costs soaring.

Challenged on the idea that Hunt, when he presents his Autumn Statement to parliament next week, was likely to place some of the blame for the economic crisis on their predecessors, Kwarteng, a Truss ally, pushed back.

“The only thing that they could possibly blame us for is the interest rates and interest rates have come down and the gilt rates have come down,” he said. “The black hole and structural problems are already there. I mean, it wasn’t that the national debt was created by Liz Truss’s 44 days in government.”

Hunt’s Autumn Statement on November 17 is expected to include tax rises and spending cuts worth about £55bn a year in order to plug the fiscal hole, estimated at between £30bn and £40bn. 

His comments came as the latest figures published by the Office for National Statistics suggested the UK economy has entered what is forecast to be a prolonged recession.

The chancellor said that it was “disappointing but not entirely unexpected news” that the Bank of England had forecast that the UK would soon enter recession, adding that his statement next week would outline the government’s efforts to bring down inflation and support the most vulnerable.

In his first interview since his sacking, Kwarteng repeatedly refused to apologise to those negatively affected by his economic policy but conceded there was “turbulence” in the markets and said he felt sympathy for those attempting to remortgage.

But he admitted the administration “tried to do too much too quickly”, adding he had warned the prime minister at the time.

“After the ‘mini’ Budget we were going at breakneck speed and I said, ‘You know, we should slow down, slow down’,” the Conservative MP for Spelthorne said. “I’m responsible. I’m not gonna wash my hands with it. I was chancellor of the exchequer. I was also part of the top team. But looking back I think we could have had a much more measured approach.”