Government denies responsibility for market turmoil as pound slumps

Mini-Budget labelled ‘reckless and ideological disaster’ by some Conservatives

The government has attempted to deny responsibility for Britain’s financial woes, saying that all major economies are suffering as a result of Vladimir Putin’s war in Ukraine.

Liz Truss and chancellor Kwasi Kwarteng have been widely blamed for spooking investors through their plans to cut tax for high earners and to increase state borrowing.

After Mr Kwarteng gave his mini-Budget on Friday, the pound plunged, reaching an all-time low against the dollar on Monday.

Amid such turmoil, the Bank of England was forced to intervene on Wednesday, saying it would temporarily purchase 30-year government bonds, which have hit a 20-year high.

The bank said the move was taken to avoid “material risk to UK financial stability”, following warnings that the gilt market was close to becoming “untradeable”.

Financial secretary Andrew Griffith praised the bank for what he termed its “timely” intervention in the markets.

However, the minister refused to accept that the chancellor’s financial plans for growth had caused Britain’s economic crisis.

The Tory MP said Mr Putin’s invasion of Ukraine had led to spikes in energy costs and had caused supply-side difficulties.

“That’s impacting every major economy. Every major economy you are seeing interest rates going up as well. Every major economy is dealing with exactly these same issues,” he claimed.

Other Conservative MPs have spoken out vehemently against the government’s actions, accusing it of throwing their party and Britain into jeopardy.

One cabinet member has even predicted that Ms Truss could be forced out of No 10 after just one month in office if she does not fire Mr Kwarteng.

“Liz has a pretty quick choice to make: either she bullets her chancellor and changes course or she could lose her premiership within a month,” they said.

Nick Timothy, former prime minister Theresa May’s chief of staff, has described the mini-Budget as a “reckless and ideological” disaster, which threatens “the savings and livelihoods of ordinary people”.

“The libertarian right has captured the government and pursued a plan they were warned against,” he added.

In a rare intervention, the International Monetary Fund (IMF) has also rebuked the British government over its policies.

“Given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture, as it is important that fiscal policy does not work at cross purposes to monetary policy,” it said in a statement on Tuesday evening.

The global lender added that the plans set out in the mini-Budget would likely increase inequality in Britain.