British Prime Minister Liz Truss on Monday apologized for her controversial mini-budget that crashed the country’s currency, rocked financial markets and prompted her to sack her finance minister and closest political ally.
In an exclusive interview with the BBC, Truss insisted she will lead her Conservative Party to the next general election, even though her government has been under enormous pressure from investors and party members since the mini-budget was unveiled in late September.
The plan – which included unfunded tax cuts, huge government bonds and exempting energy companies from an unexpected tax – dropped the pound to its lowest level against the dollar in decades.
“I want to take responsibility and apologize for the mistakes that have been made. I wanted to act to help people with their energy bills deal with the high tax problem, but we’ve gone too far and too fast,” Truss told the BBC’s Chris Mason.
“I installed a new chancellor with a new strategy for restoring economic stability.”
Last Friday, Truss replaced Chancellor of the Exchequer Kwasi Kwarteng with Jeremy Hunt, a former multi-client cabinet minister who has twice run for leadership.
Since then, Hunt has retracted many of her key campaign promises. After just four days in office, he said he would reverse “almost all” tax measures announced by his predecessor three weeks ago. The stunning reversal would raise £32 billion ($36 billion), he said.
A planned cut in the base income tax rate from April 2023 has been postponed “indefinitely”. And although the government has said it will guarantee energy prices for households and businesses this winter, it will not commit to capping prices beyond next spring.
“No government can control the markets, but every government can provide assurance about the sustainability of public finances,” Hunt said. “The UK will always pay its way.”
Markets have calmed down somewhat in recent weeks, but only after major intervention by the Bank of England, leaked rumors that the mini-budget was being abandoned and reports – which have proved true – that Kwarteng would be sacked.
The moves amount to an erosion of Truss’s flagship “growth plan” and put her in a dangerous political position.
The opposition Labor Party said Hunt’s statement shows how the government has made life more difficult for ordinary people as mortgage rates and other borrowing costs have skyrocketed in recent weeks.
“However, we must ensure that we have economic stability and that must be my priority as Prime Minister. I acted in the national interest. I remain committed to the vision, but we have to do it differently,” Truss told the BBC after being asked if her vision for Britain was “dead”.
Truss said she still believes in the ‘high growth, low taxes’ formula she struggled with in early September to win Conservative Party leadership – but said she recognizes Britain is ‘struggling with very difficult times at the moment circumstances” was confronted.
Asked if she was Prime Minister “in name only” after appointing a Treasury Secretary who was “carrying out a plan miles away from your own,” Truss replied, “I knew we had to act to protect economic stability. and that is why I appointed Jeremy Hunt.”
“I’ve worked very closely with the Chancellor over the past few days to ensure we have the right package, but it would have been totally irresponsible not to act in the national interest as I did,” she said.
Truss added it was “painful” to sack her “friend” Kwarteng as Treasury Secretary, but said she stood by her decision. She also apologized to her party’s lawmakers for her “mistakes” but said she will “lead the way” and focus on delivering for Britain.
According to the constitution, the next parliamentary elections do not have to take place until January 2025. There’s no guarantee Truss will survive that long, although party rules would make it difficult in the short term to unseat the Conservative fourth leader in just over six years, protecting her from a leadership challenge in her first year in office.