Liz Truss says Mark Carney ‘defensive’ over low economic growth

Liz Truss declined to express regret about the consequences of her doomed financial package – Stefan Rousseau/PA

Liz Truss has hit back at criticism from Mark Carney, accusing the former Bank of England chief of dodging responsibility for low growth.

On Sunday, Mr Carney said the former prime minister had helped turn the UK into “Argentina on the Channel” in what appeared to be a reference to the economic turmoil that followed her mini-Budget last year.

But Ms Truss said Mr Carney was “defensive” about his role in “the 25-year economic consensus that has led to low growth across the Western world”.

“I’m afraid there’s quite a lot of finger-pointing going on from people like Mark Carney because they don’t want to admit their culpability or the culpability of their central banking associates in this,” she said.

“Of course politicians should be held accountable and responsible for what we do but, when there are people with significant power, I don’t feel that the same questions are necessarily asked about them.”

Speaking at a meeting of centre-Left leaders in Montreal, Mr Carney accused Ms Truss and Brexiteers of having a “basic misunderstanding of what drives economies”, saying they treated tax cuts as “a Pavlovian reaction to every problem”.

“It meant when Brexiteers tried to create Singapore on the Thames, the Truss government instead delivered Argentina on the Channel,” he said.

Mark Carney said Lizz Truss had created ‘Argentina on the Channel’ – Arun Sankar/AFP

Ms Truss also accused the Office for Budget Responsibility of leaking financial forecasts that spooked the markets and forced her to abandon the mini-Budget.

She was forced out of office last October after the package of £45 billion of tax cuts, outlined by Kwasi Kwarteng, her chancellor, sparked an economic crisis.

Speaking at the Institute for Government, she urged Rishi Sunak, her successor, to row back on his net zero commitments, including pushing back the proposed ban on the sale of new petrol and diesel cars from 2030 and ditching a drive to phase out gas boilers.

In what was pitched as her first significant intervention on the economy since leaving office, Ms Truss urged the Government to cut taxes, shrink welfare spending and raise the retirement age.

She declined to express regret about the consequences of her doomed financial package, saying: “The tax cuts we were introducing were not major tax cuts. They would have made a fairly marginal difference, in fact, to the level of the deficit. What they were about was showing a new direction for Britain.”

‘Counter-productive’ U-turn

The former Tory premier said her government felt pressured by the Bank into committing to a “counter-productive” U-turn on the tax plans.

And she implied a leak from the Office for Budget Responsibility (OBR) doomed her mini-budget, saying: “By October 7, the OBR were already leaking their calculations that there was a £70 billion hole in the budget.

“These numbers of course subsequently proved to be wrong, but that leak would have made delivery of the corporation tax freeze untenable.”

A spokesman for the OBR rejected the claim, stating: “The former prime minister’s statement is incorrect. We provided our advice on the economic and fiscal implications of the growth plan (the so-called ‘mini-Budget’) exclusively to the chancellor and Treasury on Friday Oct 7 2022.

“A full timetable of our interactions with the Government over the autumn of 2022 is published in the foreword to the November 2022 economic and fiscal outlook.”

Ms Truss admitted she had never heard of the liability driven investment (LDI) pension funds that were hit by her mini-Budget until after the economic crisis struck, blaming media organisations for failing to do “a brilliant job” of analysing the LDI crisis and singling out the BBC.

Mr Sunak did not watch his predecessor’s speech, but Downing Street defended his stewardship of the economy, saying that both he and Jeremy Hunt, the Chancellor, “are committed to growth”.

“The Chancellor has set out our strategy to target the areas where we think there is most opportunity for growth, including on research and development, and other areas, the spokesman said. “We are confident that by halving inflation and through other means we will be able to further boost growth.”

Ms Truss twice dodged questions about whether she would withdraw her resignation honours, as Labour called on Mr Sunak to block her list.

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