Liz Truss was primarily responsible for budget mini-decisions, not Kwarteng, former finance minister Chris Philp says
Chris Philp was giving interviews this morning on behalf of the government in his capacity as policing minister at the Home Office. When Liz Truss was prime minister, she was chief secretary to the Treasury, but was demoted by Rishi Sunak. In his interview on BBC Breakfast, Philp was asked about his previous work and whether he would apologize for his role in the disastrous mini-budget. He refused. But he also implied that Truss herself, and not Kwasi Kwarteng, the chancellor, was primarily to blame for what happened. He told the program: Decisions around the mini-budget were mainly taken by the then prime minister and to a lesser extent by the then chancellor. Kwarteng, who was chancellor at the time of the mini-budget, has yet to speak publicly since being sacked by Truss about whether he believes she or he was primarily to blame. However, he was reported to be cautious about scrapping the 45% top tax rate in the mini-budget and insisted the measure should be included. (It was the first mini-budget measure to be abandoned). Interestingly, in an interview shortly before he became chancellor, Kwarteng said he believed the Treasury should be “constitutionally subordinate” to No 10. Speaking to Harry Cole and James Heale about their biography of Truss, he also criticized Rishi Sunak that he was not postponed in the first place minister. Kwarteng said: In the meetings I was in, they were very senior, the Treasury, they were the numbers people, they were the detail people, and they indulged, they humored the prime minister. I don’t know if they ran rings around it. they were very rude and the special advisers were very rude and did not give him any respect or deference. Kwarteng contrasted Sunak with Philip Hammond, chancellor under Theresa May, who, he said, had the “maturity” to see that May was ultimately in charge because “the prime minister was the person who won the leadership, he was in charge of the government ». .
Minister says it’s “a bit cheeky” for asylum seekers to complain about conditions
Chris Philp, the home secretary, has said it is a “bit of a cheek” for people he said had “entered the UK illegally” to complain about the conditions. My colleague Jamie Grierson has the full story here. Simon Coveney, Ireland’s foreign secretary, welcomed the British government’s decision not to call an election in Northern Ireland before Christmas. I fully share the objective of the Secretary of State. restoration of functional institutions in N.I. We had a good discussion this week, including the legal obligations under the NDNA. No election before Christmas is welcome and creates room for progress on other issues. We stay in touch. https://t.co/v1c5YbQb5Q — Simon Coveney (@simoncoveney) November 4, 2022 Our story on calling a non-early election is here.
Mark Carney defends claim UK economy has shrunk from the size of Germany by 90% to 70% after Brexit
Good morning. Last month, in an interview with the Financial Times, Mark Carney, the former governor of the Bank of England, added to the weighty evidence of the damage Brexit has done to the UK economy with a startling statistic. He told the FT: In 2016 the UK economy was 90% the size of the German economy. Now it is less than 70%. That figure was widely reported on social media but was also hotly contested, even by economists who accept that Brexit has held back the UK economy. One of the most prominent critics was Jonathan Portes, a former government economist who is now professor of economics and public policy at King’s College London, who described it as a “zombie statistic” and “nonsense”. He said Carney was measuring the size of the two economies according to prevailing exchange rates. However, he said the usual method for comparing economies was to use “purchasing power parity”. (By the way, this is a measure that tries to assess how rich Britain is, not by looking at how much we could buy if we took our pounds and went to the US or China, but by how much we could buy in the UK. ) Portes told the Daily Mail last month: The pound has risen nearly 10% against the dollar since the Truce nadir. Did the UK economy really grow by nearly 10% over the US in a matter of weeks? Similarly, Carney picks a date when the pound was unusually high against the euro (January 2016), another when the pound was much lower, and then states that we have underperformed Germany by 20%. This is obvious complete nonsense. If you look at the real annual growth rate in domestic currency, the UK and Germany have grown by fairly similar amounts since 2016. But this morning, in an interview on the Today programme, Carney defended the use of the 70% figure. He said the value of the pound started to fall when the referendum was called, fell sharply when the result was announced and “hasn’t recovered”. Carney accepted that there was a difference between the purchasing power parity exchange rate and the market exchange rate. The market exchange rate was what ultimately mattered, he said, because it affected the UK’s ability to buy goods from abroad. He continued: It is relatively rare to have large differences between the two [exchange rates]. But you get them when you have a long-term productivity shock in the economy and unfortunately that’s what we have in the UK. It was predicted that we would achieve this. It’s coming to be. And… it’s one of the issues facing the Bank of England. That’s what we said [before Brexit] what was going to happen was that the exchange rate would go down, it would stay down, that would add to inflationary pressure, the capacity of the economy would be reduced for some time because of Brexit, that would add to inflationary pressure and we would have a situation – where it’s the situation we have today – where the Bank of England has to raise interest rates despite the economy being in recession. Carney said he and Portes had a “difference of opinion” about it. But, Carney said, in his view what mattered was “the purchasing power, the international weight of the economy.” And that has shrunk, he argued. Another way of putting it is that this structural change is partly what the government, and all of us, in the UK are dealing with. We’ve had a big blow to our productivity, our capacity in the economy… and we have to make some tough decisions to get it back. And this is one of the consequences of a decision made a few years ago. It’s worth focusing on because it’s relatively quiet in Westminster. But in other stories this morning, Sir Graham Brady, chairman of the Conservative 1922 Committee, has in fact confirmed that Boris Johnson has enough support to get on the ballot for the latest Tory leadership contest. And the government has signaled that plans to build a new nuclear power station in Suffolk are under review and could be delayed or scrapped. I’m trying to follow the comments below the line (BTL) but it’s impossible to read them all. If you have a direct question, include “Andrew” somewhere and I’m more likely to find it. I try to answer questions and if they’re of general interest I’ll post the question and answer above the line (ATL), though I can’t promise I’ll do it for everyone. If you want to get my attention quickly, it’s probably best to use Twitter. I’m on @AndrewSparrow. Alternatively you can email me at [email protected] Updated at 09:45 GMT
