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Tory leadership LIVE: Truss vindicated as BoE announce major interest hike

Tory leadership LIVE: Truss vindicated as BoE announce major interest hike

Independent economist Julian Jessop said there would be “lots of warnings today from Team Rishi about the cost of higher interest rates as the Bank of England hikes”, but offered three counters that vindicate Liz Truss’s position. Mr Jessop pointed out that the tax cuts proposed by Ms Truss are “unlikely to have any significant impact on inflation” and could even help to reduce it. Secondly, he said it’s Team Rishi that is “playing at ‘fairytale economics’ if they think the current ultra-low level of interest rates is normal, healthy or sustainable”. Mr Jessop added that “most economists agree that fiscal policy is too tight – largely due to Rishi’s tax hikes – and monetary policy is too loose”. Thirdly, he said it is at least right to worry that rising short-term interest rates will add to the cost of public debt. But added that “this simply strengthens the case for the Government to lengthen the maturity of borrowing to lock in low rates – as Liz Truss has proposed!”

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Francesca Edwards

POLL: Do you want Boris Johnson to stay as Prime Minister?

Boris Johnson is away on holiday this week, but that hasn’t stopped the calls from those who wish he to come back to the role as Prime Minister. 

Senior members of the Conservative Party are demanding Boris Johnson be reinstated as Tory Party leader. 

Express.co.uk has learnt that constituency party chairs on the National Convention have written to demand his offer to resign is rejected. 

But what do you think? Vote in our poll.

 Do you want Boris Johnson to stay as Prime Minister?

Do you want Boris Johnson to stay as Prime Minister? (Image: Getty)

Francesca Edwards

Truss’s plan could ‘risk contributing the problem’- former Chancellor warns

A former Chancellor has suggested Liz Truss’s plan for immediate tax cuts runs “the risk of contributing to the problem”. 

Ken Clarke warned the country if in “total stagflation” and the Government should be “very narrowly, truly” targeting people who are struggling to cope with costs. 

Lord Clarke continued: “I very much hope we don’t see an increase in the number of people destitute in this country.

“We already have too many people in abject poverty and the number is likely to rise, and I think the Government should be looking at things that help the very poorest and the very low-paid, and things like Universal Credit.

“What we don’t want is immediate tax cuts which cheer up the better off and are particularly valuable to the very wealthy.”

Francesca Edwards

Coming up tonight

Liz Truss and Rishi Sunak will go head-to-head tonight in the next leadership debate on Sky News at 8 pm. 

Kay Burley will host a live studio audience as the two candidates face questions on the cost of living crisis, Brexit, the war in Ukraine, and now the Bank of England interest rate hike announced on Thursday. 

Truss takes victory in tax cuts row

Liz Truss has claimed victory in the row over tax cuts in a humiliating blow to her rival Rishi Sunak.

Following the Bank of England’s interest rates decision this morning, she said*: 

“Today’s news underlines the need for the bold economic plan that I am advocating.

“We need to take immediate action to deal with the cost of living crisis, grow the economy and deliver as much support to people as possible. As Prime Minister, I’d use an emergency budget to kickstart my plan to get our economy growing and offer immediate help to people struggling with their bills. Through supply side reforms, dealing with burdensome business regulation and cutting taxes, I will get our economy back on track. My tax cuts are necessary, affordable and not inflationary.

“You cannot tax your way to growth. Business as usual will not do. Instead, we need a new approach on the economy, we need to challenge the failing economic orthodoxy and we need to deliver the necessary reform to tackle inflation and achieve sustainable growth.“

Good afternoon

Good afternoon I’m Francesca Edwards, I’ll be bringing you all the latest developments on the Tory leadership contest for the next eight hours. Please feel free to get in touch with me as I work if you have a story or tips to share! Your thoughts are always welcome.

Email: francesca.edwards@reachplc.com

Twitter: @FrankieLEdwards

Tara Fair

‘Bank of England confirms Conservative recession is on the horizon,’ say Liberal Democrats

The Bank of England hiking interest rates today confirms a Conservative recession, according to the Liberal Democrats.

Responding to the Bank of England predicting a recession in today’s economic update, Liberal Democrat Treasury spokesperson Sarah Olney MP said: “The Conservatives’ recession is on the horizon and millions of people will suffer as a result.

“The British public will never forgive the Conservative party for their disastrous economic policies and tax hikes.

“They have put party over country time and time again, and sadly it is families and pensioners who are paying the price.

“Neither Rishi Sunak or Liz Truss have a credible plan to get us out of the mess they’ve created.

“We must have a general election as soon as the Conservative party contest is over to offer the country the real change it needs.”

‘Bank of England confirms Conservative recession is on the horizon,’ say Liberal Democrats (Image: GETTY)

Tara Fair

NHS ‘absent from leadership debate,’ former health secretary says

The NHS has been “absent from this leadership campaign” between Rishi Sunak and Liz Truss, former health secretary Jeremy Hunt has said.

He said after energy bills the biggest issue facing the next prime minister “will be a looming winter crisis”.

We spend a similar % of GDP on health as France & Germany, but crucially, both have way more drs per head because we STILL donu2019t have a workforce plan. @CommonsHealth have been warning about this for years now but we have met obfuscation & resistance from @DHSCgovuk.

u2014 Jeremy Hunt (@Jeremy_Hunt) August 4, 2022

Tara Fair

Bank of England hikes interest rates to 1.75% in biggest rise for 27 years

The Bank of England has hiked interest rates by half a percentage point – the largest increase since 1995.

The rise will increase borrowing costs for millions, including those with tracker rate mortgages.

READ MORE

Tara Fair

Good afternoon

Good afternoon from London. I’m Tara Fair, I’ll be bringing you all the latest developments on the Tory leadership contest. Please feel free to get in touch with me as I work if you have a story or tips to share! Your thoughts are always welcome.

Email: Tara.fair@reachplc.com

Twitter: @TaraFair_

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