Kate Andrews

The mini-Budget was a spending spree. The ‘medium-term fiscal plan’ was meant to explain the funding. But what exactly is going to be in it?  Liz Truss and Kwasi Kwarteng were thought to have (finally) come to terms with the need to address the need for some restraint, after their mini-Budget led to market chaos which is yet to settle. Their fiscal statement – in other words, how they would fund their tax cuts – was moved forward by almost a month, to 31 October. Its contents were thought to include some major spending cuts, in a bid to convince markets that fiscal discipline still guides the Tory party.

Speculation has been growing that the Bank of England might announce an extension of its emergency gilt-buying programme which is set to end on Friday. Despite the Treasury moving forward its ‘medium-term fiscal plan’ announcements from November to the end of this month, gilt yields have been rising yet again this week in the lead-up to the end of the scheme. It seemed likely that the Bank’s gilt-buying programme might be extended for another two weeks as a result, in order to buy time before the Chancellor Kwasi Kwarteng’s announcement on 31 October. But tonight Andrew Bailey put that speculation to bed.

Liz Truss has bet the house on growth. The Prime Minister and Chancellor formally gave themselves the target of a 2.5 per cent growth rate in last month’s mini-Budget. But at the Conservative party conference this week, Truss used her speech to frame her premiership around growth, singling out as her enemies anyone she deems part of the ‘anti-growth coalition’. Anything the government does now needs to be approached with caution rather than revolutionary zeal As I say in today’s Telegraph, this was perhaps Truss’s most savvy political move to date. If the Prime Minister has had any success so far, it’s been to completely refocus the national narrative towards growth.

In theory, I should be delighted about the Liz Truss project. She is saying the things I’ve been arguing for years: talking not just about lower taxes but about basic liberty and how it relates to everyday life. She’s passionate about these ideas – and sincere. I remember watching her deliver a rallying cry, a salute to the ‘Airbnb-ing, Deliveroo-eating, Uber-riding freedom fighters’. This was just over three years ago when she was a Treasury minister. Her speeches were getting punchier and her one-liners becoming newsworthy and memorable. She was turning into one of the most recognisable faces of classical liberalism in Britain – a development which clearly delighted her. Truss asked for this job.

When Liz Truss and Kwasi Kwarteng entered Downing Street, laser focus was not only applied to them, but also to the free market think tanks they had worked with over the years. This evening, Kwarteng paid a visit to two of them, as the Institute of Economic Affairs and The Taxpayers’ Alliance hosted the Chancellor at Conservative party conference for one-on-one conversations. Similar to his speech yesterday, Kwarteng used the opportunity to try to take some heat out of his mini-Budget. When asked if market reaction was part of the Treasury orthodoxy he and Truss had been taking aim against for weeks, he shook his head and pointed to the ‘global context’ instead.

When the Liz Truss camp floated the idea of side-lining the Office for Budget Responsibility for her government’s first fiscal statement, the argument went that the announcements would be targeted at the energy crisis – and they couldn’t wait. As anticipation around the fiscal event grew, and it became clear that it would include much more than an energy update, MPs started to suspect foul play – that this was an overtly political attempt to avoid scrutiny of Kwasi Kwarteng’s growth plans and spending splurge.

Tonight the International Monetary Fund has weighed in on the UK’s mini-Budget, offering a direct rebuke of Liz Truss and Kwasi Kwarteng’s tax cuts. ‘We are closely monitoring recent economic developments in the UK and are engaged with the authorities,’ its spokesperson said, in reference to the fluctuating pound and rising borrowing costs. ‘Given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture' – suggesting some concern that the measures could be inflationary.