Liz Truss had to be convinced to issue a government statement yesterday to calm the markets, Sky News understands.
Faced with market turmoil, spiking borrowing costs, and the drop in the value of the pound in the foreign exchange markets, the prime minister’s initial instinct was to stand firm and say little or nothing, unwilling to look like she might be shifting position.
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However, after a meeting with Chancellor Kwasi Kwarteng yesterday, Ms Truss agreed the Treasury would issue a statement promising further details on 23 November on how the government would ensure borrowing would not spiral out of control.
In effect this gives the government eight weeks to come up with a plan to stabilise the markets – likely to involve spending cuts in Whitehall, public services, investment and probably welfare.
The government will reject claims circulating in Whitehall that the meeting between Ms Truss and Mr Kwarteng was “argumentative” and descended into a “shouting match”.
This comes as the chancellor plans to hold further emergency meetings with global bankers this week to discourage them speculating on the pound.
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Chancellor ‘more sympathetic’ to Bank’s concerns
There is deep concern in the City that Treasury ministers are still gunning for Andrew Bailey, the governor of the Bank of England, and his two most senior lieutenants, with some believing that removing this team from office would dent Britain’s global reputation for stability.
Sky News can confirm that Monday’s meeting between chancellor and prime minister concentrated on whether to issue a statement and what to say, with the two sides initially taking different positions.
One source said that the chancellor was more sympathetic to the Bank’s concerns than the PM.
The prime minister’s team were aware that the Bank of England was going to issue a statement after the close of markets on Monday.
In the end, the Treasury issued an almost simultaneous statement promising to release economic forecasts by the Office for Budget Responsibility and a plan on debt on 23 November.
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‘This needs to be explained better’
Tory MPs have expressed huge concern at what some of them regard as a reckless gamble, spending billions of pounds on tax cuts for the rich, which has spooked the markets.
Some in Number 10 are believed to blame the Tory unrest on the failure of ministers and their teams to properly explain their plans.
“Some around Truss think this all just needs to be explained better,” said one business source familiar with the conversations in Number 10.
Some in government are understood to see the market assault on the pound and government debt as a plot by the left, something which has surprised city traders.
