Liz Truss rules out spending cuts amid UK market turmoil

LONDON — Liz Truss has ruled out cutting public spending to balance the books and finance the tax cuts announced in her controversial mini-budget.

Amid fresh turmoil in U.K. markets, which have been spooked since Truss’ government unveiled an unfunded pledge to cut taxes, the prime minister said on Wednesday that she was “absolutely” not planning any spending reductions.

She was responding to Labour leader Keir Starmer during a session of prime minister’s questions in the House of Commons.

Starmer pointed out that during her campaign to become Conservative Party leader, Truss had said she was “not planning public spending reductions.”

Asked whether that was still her plan, she replied: “Absolutely … We are spending almost £1 trillion of public spending. We were spending £700 billion back in 2010.”

“What we will make sure is that over the medium term the debt is falling. But we will do that not by cutting public spending but by making sure we spend public money well.”

The Institute of Fiscal Studies said this week that the government will need to find £62 billion in either spending cuts or tax rises to stop public debt growing.

Truss’ words drew criticism from the TaxPayers’ Alliance, a pressure group which campaigns for lower taxes and has generally been supportive of Truss’ direction of travel. Its political director James Roberts said: “The prime minister is in danger of delivering a half-baked fiscal plan. Government spending has grown wildly over recent years and tax cuts are back on the table, but working taxpayers know there’s no such thing as a free lunch.”

U.K. markets have been roiled since the mini-budget was unveiled last month. The Bank of England had to intervene in the gilt market after Kwasi Kwarteng, the chancellor, announced more than £40 billion of tax cuts without scrutiny from Britain’s fiscal watchdog.

Truss and Kwarteng have since U-turned on their decision to abolish the top rate of income tax and brought forward the planned date for publication now further fiscal forecasts to October 31.