Truss ready to send UK economy into inflationary spiral, says Sunak | UK cost of living crisis

Liz Truss will send the economy into an “inflationary spiral” if they don’t choose between their unfunded $50 billion tax cuts.

Sunak’s leadership campaign said Truss would increase borrowing to “historic and dangerous levels” and “seriously jeopardize” public finances if it tried to do both.

The comments came after Truss, the frontrunner on the road to the next prime minister, signaled another about-face with direct support for businesses and households facing soaring energy bills this winter.

In a statement, Sunak’s campaign said: “After weeks of refusing direct payments of support as ‘handouts’ by Truss supporters, the reality of what winter will bring has slowly woken up. They now say they will help people – but what help, for whom, when and how it will be paid for remains a mystery.

“The reality is that Truss cannot simultaneously deliver a support package and unfunded permanent tax cuts worth £50billion all at once. This would mean increasing borrowing to historic and dangerous levels, seriously jeopardizing public finances and sending the economy into an inflationary spiral.”

The dispute comes ahead of Ofgem’s announcement on Friday, when the regulator is expected to increase the ceiling on energy bills from £1,971 to around £3,600.

The former chancellor’s team also commented on reports that Truss has no plans to ask the independent Office of Budget Responsibility (OBR) for a forecast ahead of next month’s emergency budget, which she plans to do.

“It’s no wonder they want to avoid an independent review of the OBR in their emergency budget – they know you can’t do both and it’s about time they made that clear now,” Sunak’s campaign said.

Sunak supporter Mel Stride said Truss’ plans for an emergency budget needed to be transparent and affordable so ministers weren’t “flying blind”.

The Chair of the Commons Treasury Committee told LBC: “Right now the Liz camp is saying I believe no OBR forecast is being made at this time and that is kind of flying blind.

“It means you’re doing all these dramatic things about taxes etc but you don’t really know what the impact of the independent forecaster is on public finances and I think that’s a pretty serious situation if that were to happen .”

Sunak’s attack on Truss’ policies came after Michael Gove, in an article for The Times, said Truss was on “holiday from reality” with its plans for tax cuts during an economic crisis when he supported Sunak.

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Gove, who served as senior level secretary until he was sacked by Boris Johnson before stepping down as Tory leader, said Truss’ vision put the “stock options of FTSE 100 executives” ahead of the nation’s poorest.

In contrast, the economy secretary defended Truss by saying there would be support for the poorest households in relation to the cost-of-living crisis.

Kwasi Kwarteng wrote in the Mail on Sunday: “I understand the deep concern this causes. As winter approaches, millions of families will be concerned about how to make ends meet. But I want to reassure the British that help is coming.”

Truss was optimistic about the economy, saying there was “too much talk about there’s going to be a recession” as she insisted an economic slump was not inevitable despite the Bank of England’s forecast.

In an interview with the Sun on Sunday, she said she was looking for help “across the board,” saying there could be more support for businesses and households.

So far, she has focused on cutting taxes, such as an immediate rollback of the Social Security hike, while Sunak has focused on trying to curb rising inflation.