Liz Truss seeks to reassure markets as she attacks ‘anti-growth’ coalition

Liz Truss sought to reassure financial markets on Wednesday by insisting she was committed to fiscal discipline as she also claimed there was an “anti-growth coalition” opposed to her economic reforms.

The prime minister, who has been in power for just a month, rallied Conservative MPs and party members behind her faltering leadership by blaming the market turbulence that followed her “mini” Budget last week on global issues, including the “tempest” caused by Russia’s invasion of Ukraine.

In her keynote speech at the end of a Tory conference that descended into cabinet infighting and party indiscipline, Truss said she had three priorities for Britain: “Growth, growth and growth.”

She admitted her economic reform agenda would not be universally welcomed. “Whenever there is change, there is disruption and not everyone will be in favour of change. But everyone will benefit from the result — a growing economy and a better future.”

Truss’s mini-Budget involving £45bn of unfunded tax cuts sparked market turmoil last week. Sterling’s value plunged against the US dollar, and a sharp spike in government bond yields prompted the Bank of England to unveil an emergency programme to buy gilts to safeguard pension funds.

On Wednesday, sterling fell by more than 2 per cent against the dollar to $1.123 as a rebound from last week stalled. Prices of long-dated government bonds also fell, as the BoE said it had declined to buy any gilts for the second day in a row under its new programme.

Truss sought to quash speculation she could sack chancellor Kwasi Kwarteng after scrapping plans in the mini-Budget to abolish the 45p top rate of income tax because of opposition from Tory MPs.

She pledged to keep an “iron grip” on the public finances, saying: “I am clear we cannot pave the way to sustainable economic growth without fiscal responsibility, so we will bring down debt as a proportion of our national income.”

Truss claimed the Conservatives faced an “anti-growth coalition” involving the opposition Labour and Liberal Democrat parties, trade unions, anti-Brexit and environmental campaigners as well as “vested interests dressed up as think-tanks” that did not understand “aspiration”.

Sir Keir Starmer, Labour leader, criticised Truss and the Tories for refusing to “abandon their kamikaze Budget that crashed the economy”. “Labour would do things differently because we know real growth comes from working people and businesses,” he added.

Truss’s initially uncertain delivery of her speech was bolstered when she was interrupted by two protesters with a Greenpeace flag asking “Who voted for this?” They were dragged out of the hall to cheers and a standing ovation from Conservative members.

Truss portrayed herself as being on the side of “normal working people” including commuters, white van drivers, hairdressers, plumbers, accountants, IT workers and “people who make things in factories”.

After opinion polls showed Labour securing a huge lead over the Tories, Truss told party activists she had fought to get where she was. “I know how it feels to have your potential dismissed by those who think they know better.”

The prime minister insisted she was sticking to plans to “level up” so-called left-behind areas of the UK — a policy forged by her predecessor Boris Johnson. “I know what it’s like to live somewhere which is not feeling the benefits of economic growth,” she said, referring to her upbringing in northern England and Scotland.

She claimed the answer to Britain’s economic problems was “growing the economic pie so that everyone gets a slice”, partly by cutting taxes.

Truss is braced for further rebellions by Tory MPs after abandoning her plans to scrap the 45p tax rate: she is notably refusing to commit to Johnson’s plans to raise welfare benefits in line with inflation.

Truss is expected to focus on discipline within the cabinet after several ministers openly strayed from the government line at the conference. Penny Mordaunt, leader of the House of Commons, supported raising benefits in line with inflation. Suella Braverman, home secretary, made the case for the UK leaving the European Convention on Human Rights.

One Truss ally said: “Some ministers need a stern talking to after their comments at conference. Liz will remind them why policy discussions should be done in private, not in public.”