Liz Truss clashes with BBC host over mini-budget
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Andrew Neil has warned the Tories are facing the prospect of a wipeout at the next general election. The journalist said crippling interest rates and mortgages around the time of Black Wednesday in 1992 sealed the fate of the Conservatives when the country took to the polls in 1997, which Labour won by a landslide.
Mr Neil, widely regarded as Britain’s toughest political interrogator, added that the Tories should “brace for a repeat” amid the economic turmoil in the wake of the mini-budget.
The broadcaster tweeted: “It was the impact of rising interest rates and mortgages surrounding the autumn 1992 ERM crisis that did for the Tories, even five years later.
“They never really recovered, though the economy did. Mortgage payers braced for a repeat. Tories should also brace for a repeat.”
Black Wednesday took place on 16 September 1992 when a crash of the pond forced the UK to exit the European Exchange Rate System (ERM).
Mr Neil’s warning comes as the next general election is due in around two years.
Prime Minister Liz Truss faced a grilling this morning in a series of interviews with regional BBC radio stations as Britain is gripped by economic chaos.
Chancellor Kwasi Kwarteng’s tax-slashing mini-budged last Friday has spooked markets sending the pound into free fall.
The £45billion package of tax cuts, including abolishing the top rate of income tax, has led to extraordinary interventions from the International Monetary Fund (IMF) and the Bank of England.
Ms Truss today insisted the mini-budget is the “right plan” to boost the economy amid the cost of living crisis.
The Prime Minister told BBC Radio Leeds: “We had to take urgent action to get our economy growing, get Britain moving and also deal with inflation.
“Of course that means taking controversial and difficult decisions but I am prepared to do that as Prime Minister because what is important to me is that we get our economy moving, we make sure that people are able to get through this winter and we are prepared to do what it takes to make that happen.”
It comes after the Bank of England yesterday launched an emergency government bond-buying programme to prevent borrowing costs from spiralling out of control.
The Bank announced it was stepping in to buy up to £65 billion worth of government bonds – known as gilts – amid fears some UK pension funds were at risk of collapse.
Earlier this week, the Bank signalled it is ready to further ramp up interest rates to shore up the pound and guard against increased inflation following a 0.5 percent hike to 2.25 percent last week.
But there are fears of surging mortgage costs with interest rates at their highest level for 14 years.
It comes after the pound sunk to a record low of 1.03 against the US dollar on Monday with fears it could be heading towards parity.
In a rare intervention on Tuesday, the IMF criticised the Government’s strategy and urged it to change course amid the fallout from the mini-budget.
The economic meltdown comes just days before Tory MPs and members will descend on Birmingham for the first party conference with Ms Truss at the helm.
But the event is being snubbed by a number of big names including former Chancellor Rishi Sunak, who lost the Tory leadership race to Ms Truss.
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