UK Government defends tax plans despite turmoil in financial markets

The UK Government will press on with the economic plans set out by Kwasi Kwarteng, despite turmoil in the financial markets, a Treasury minister has indicated.

It comes after The Bank of England said that it would step in to calm the markets after a plunge in the value of the pound, with borrowing costs spiking.

The International Monetary Fund (IMF) announced on Tuesday that it is “closely monitoring” developments in the UK, as well as urging Kwarteng to re-evaluate the measures.

Ministers were also warned by the organisation that the Government’s plans would likely increase inequality.

Despite the warnings, financial secretary Andrew Griffith defended the actions being taken by the Government.

“We think they are the right plans because those plans make our economy competitive,” he told Sky News.

Griffiths said that the Government wants to “get on and deliver” the plan set out by Kwarteng.

“That’s what I, the chancellor and my colleagues in government are focused on is getting on and delivering that growth.

“That is what is going to allow consumers to benefit. In the meantime, we are protecting every household and every business from the biggest macro shock out there at the moment, which is the cost of energy.”

The chancellor met with representatives from Bank of America, JP Morgan, Standard Chartered, UBS, Morgan Stanley and Bloomberg on Wednesday in an attempt to calm the markets.

According to a read-out of the meeting, Kwarteng “underlined the government’s clear commitment to fiscal discipline”.

Mel Stride, Conservative chair of the Commons Treasury Committee, indicated there is concern about his party’s MPs over the plans.

“There’s a lot of concern within the parliamentary party, there’s no doubt about that,” he said.

“I don’t want to speculate on the future of the chancellor other than to say that I think where the party should be at the moment is really uniting at a time of economic crisis.

“The last thing we want now is a political crisis to compound that and I think really focus on this issue of growth.”