The government’s tax reforms will make the economy “grow very quickly,” Kwasi Kwarteng has promised, despite uncertainty surrounding an important part of the plans.
The date of the Chancellor’s medium-term financial plan, when he will announce details of how he will bring public finances under control, is in question after Mr Kwarteng said it would happen on November 23 as originally planned, but sources at the Ministry of Finance insisted that it could be brought forward.
Now it seems likely that the plan – along with an updated economic forecast from the independent Office for Budget Responsibility (OBR) – will be out before the end of the month. Each new date must be confirmed in Parliament.
The OBR has not held discussions with the Treasury to speed up its forecasts, I understands, but most of the preparatory work has already been completed and a draft version is due to be submitted to Mr Kwarteng this week. A spokesman said: “We are ready to publish a forecast at the request of the Chancellor.”
The government’s failure to commission a new OBR forecast, which accompanies the September 23 financial report, is widely believed to be a key factor in the multi-day market collapse that followed. Investors fear the UK may not be able to fund ongoing borrowing if tax cuts continue to be funded solely by debt.
Mr Kwarteng’s future as Chancellor was cast in doubt following the chaotic reception of his mini-budget. But Liz Truss reportedly told friends there was no chance she would sack him because the two were joint architects of the government’s economic strategy.
Asked by I Speaking at a side event of the conference on how long it would take for economic reforms to boost GDP, Mr Kwarteng said: “There may be immediate impacts – the investment zones, some of these projects, are going to happen very soon. And I think you’re going to see progress very quickly – I hope so.”
He vowed to stick to existing public spending plans for at least the next two years, but proposed a new rule that would mean spending no more than economic growth, so the share of GDP that goes to the public sector , never increases.
Despite the Conservatives’ poor position in recent opinion polls, Mr Kwarteng insisted he had not given up on winning the next general election. He said: “I never predict a win because that’s hubris, but I think we can be very competitive and have a compelling story to tell.”
And he lamented that a major fiscal stimulus announced by US President Joe Biden had not triggered the same meltdown in markets as the UK tax cuts.