Chancellor Kwasi Kwarteng faces a grilling from MPs returning to the Commons after the Bank of England was forced to step up its emergency intervention to prevent a “fire sale” in UK government bonds and market dysfunction posing a “material risk to UK financial stability”.
It came as experts warned that Liz Truss and Mr Kwarteng will be forced to impose a “savage” £60bn austerity hit unless they reverse more of their tax cuts.
Britain is heading for recession until 2024 and the chancellor will be forced to either abandon his mini-Budget giveaways or cut public services by some 15 per cent, the Institute for Fiscal Studies (IFS) said.
And Tory MPs returning to the Commons on Tuesday afternoon warned there would be strong opposition to the latter option, with one former minister tellingThe Independent: “There is no way Tory MPs are going to stomach savage austerity in a post-Covid cost of living crisis. Liz has driven herself into a cul-de-sac.”
Revealing that Cabinet had not discussed the Bank’s intervention at this morning’s meeting, Ms Truss’s official spokesperson vowed the PM would not usher in a return to austerity.
