The new chancellor, Kwasi Kwarteng, has used his first meeting with bank bosses to reiterate his support for the Bank of England’s independence, and promise that the new government was poised to unveil a “radical” plan for economic growth.
Kwarteng, who previously led the business department, told 14 executives from City firms, including HSBC, NatWest and Barclays, that the government was pursuing “unashamedly pro-growth” policies that would involve slashing taxes and regulations, while creating the right conditions for investment and innovation.
He said the government’s first priority would be to support families and businesses hit by rising energy prices, but that this would mean higher borrowing in the short term.
However, Kwarteng assured them that the government was committed to reducing debt – or at least keeping it on what the Treasury said was a “downward path”. A No 11 spokesperson said the chancellor had emphasised that his “radical supply-side agenda” would also require “monetary stability and fiscal discipline”.
It comes as the prime minister, Liz Truss, and her newly appointed cabinet prepare to unveil a plan to cap energy prices for households and businesses this week that could be the most costly government intervention since the financial crisis.
Great to meet market & City leaders this morning.
— Kwasi Kwarteng (@KwasiKwarteng) September 7, 2022
I set out Prime Minister @trussliz's new, pro-growth economic approach, including immediate support for families and businesses to tackle the cost of living and a commitment to fiscal sustainability. pic.twitter.com/M04FF8TwOv
“We face extraordinary economic challenges in the coming weeks and months and I know that families and businesses across the UK are worried,” Kwarteng said after the meeting, which included the European chief executives of Goldman Sachs, JP Morgan and BlackRock. “The prime minister and I are committed to taking decisive action to help the British people now, while pursuing an unashamedly pro-growth agenda.”
He added: “We need to be decisive and do things differently. That means relentlessly focusing on how we unlock business investment and grow the size of the British economy, rather than how we redistribute what’s left.
“With a strong and resilient economy, we deliver more jobs, higher wages and raised living standards – all while reducing our debt-to-GDP ratio in a fiscally sustainable way.”
Kwarteng reiterated his support for the Bank of England’s independence, but said the central bank’s mission to control inflation was central to keeping the cost of living under control.
The Bank’s independence appeared to be under threat during the Conservative party leadership race, with Truss and her allies repeatedly questioning the performance of its governor, Andrew Bailey, and suggesting the new prime minister would review the institution’s remit.
The Bank of England was granted independence in 1997 by the then Labour chancellor Gordon Brown. Bailey was expected to meet Kwarteng on Wednesday afternoon.
