The UK government will not abandon its mini-budget despite the Bank of England having to step in amid market turmoil, a Treasury minister has said.
Labour called for the tax-cutting measures to be ditched after they sparked a fall in the pound and a surge in borrowing costs.
Government departments are also being asked to find spending cuts.
Treasury minister Andrew Griffith said the government’s proposals were the “right plans” to grow the UK economy.
He claimed “every major economy is dealing with exactly the same issues” and said the impact of “Putin’s war in Ukraine is cascading through things like the cost of energy, some of the supply side implications of that”.
The value of the pound dropped to $1.05 on Wednesday, after the Bank of England stepped in to stabilize the economy, before later rallying to about $1.08.
On Wednesday, the Bank announced it would buy government bonds on a temporary basis to help “restore orderly market conditions”.
Some pension funds hold a lot of government bonds because they are normally a stable investment, but as their value dropped there were concerns over the solvency of some funds, the BBC has been told.
The Bank’s moves on Wednesday followed a highly-critical intervention from the International Monetary Fund (IMF), which warned the measures were likely to fuel the cost-of-living crisis.
Meanwhile, Chief Secretary to the Treasury, Chris Philp, has confirmed he is asking government departments to find savings.
Speaking on ITV’s Peston, Mr Philp said government departments are being asked to “look for efficiencies wherever they can find them”.
These efficiencies will “stick to the targets” of the 2021 Comprehensive Spending Review “that set out a three-year spending plan”, Mr. Philp said.
Any savings will “enable us to target spending on things that target growth,” he added.
Source-BBC
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