Tory leadership rivals Rishi Sunak and Liz Truss have set out competing plans to deal with the economic recession forecast by the Bank of England.
During their latest TV debate, Sunak said Truss’ “unfunded” tax cuts would pour “fuel on the fire” of inflation as she said a recession would “not be inevitable” if “bold” action was taken, the BBC reported on the TV special, hosted by Sky News.
Bank of England on Thursday raised interest rates to the highest level in almost three decades, from 1.25 per cent to 1.75, in an attempt to push back skyrocketing prices. The inflation rate is forecast to hit a 42-year high of 13 per cent this year.
Sunak, who has trailed Truss in recent polls, has repeatedly said he would prioritise bringing inflation down before cutting taxes if he became prime minister.
Truss has pledged a package of tax cuts worth 30 billion pound soon after she enters office, which the Indian-origin leader has argued would increase inflation and the cost of borrowing.
Sunak told the Sky News programme: “We in the Conservative Party need to get real and fast – because the lights on the economy are flashing red and the root cause is inflation.”
Truss reiterated her pledge to immediately reverse April’s increase in National Insurance and cut other taxes, which she claimed would stimulate economic growth and prevent a recession.
“What the Bank of England have said… is of course extremely worrying, but it is not inevitable… We can change the outcome and we can make it more likely that the economy grows,” she said.
The pair is vying to win over Conservative Party members, whose votes will determine which of them will become the next Tory leader and prime minister.