Liz Truss has argued that the recession forecast by the Bank of England is “not inevitable”, as she insisted her swift tax cuts are needed rather than Rishi Sunak’s slower approach.
The Foreign Secretary used Sky’s televised debate for the Tory leadership contest to warn of “very, very difficult times” without “bold” action rather than her rival’s caution.
Allies of Mr Sunak, the former chancellor, have argued that Ms Truss’s “dangerous” approach would risk further stoking inflation, which is already forecast to hit 13%.
The financial focus of the battle to succeed Boris Johnson as prime minister only intensified with the Bank’s warnings, with it already being largely focused on their two differing strategies.
Earlier in the day, interest rates were raised to the highest level in nearly three decades, from 1.25% to 1.75%, worsening the pain for mortgage holders.
The Bank then predicted that the economy will plunge into the longest recession since the financial crisis in 2008.
Under questioning by Tory members and Sky’s Kate Burley, Ms Truss said: “What the Bank of England have said today 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 reiterated her pledge to immediately reverse the national insurance increase, introduced by Mr Sunak when he was in No 11, as well as cut other taxes to prevent the job losses of a recession.
“Now is the time to be bold, because if we don’t act now, we are headed for very, very difficult times,” added Ms Truss, who kicked off the debate ahead of a grilling of Mr Sunak.