UK must ‘pay our way’ after lessons of mini-budget, says Chancellor

Next week’s much-anticipated Autumn statement will show the UK can ‘pay our way’ as the country learns the lesson of the disastrous mini-budget, the Chancellor has suggested.His comments come after his predecessor Kwasi Kwarteng used his first interview since the fall-out from the mini-budget forced his exit from Government to argue that Rishi Sunak and Jeremy Hunt cannot put the blame for the massive black hole in the nation’s finances on Liz Truss.But Mr Hunt, who was brought in by Liz Truss to steady the nation’s finances and was kept on by Mr Sunak, suggested that the mini-budget had forced the UK into learning lessons about the need for balanced budgets.Mr Kwarteng, speaking to TalkTV on Thursday, refused to apologise for the financial turmoil unleashed by his and Ms Truss’s disastrous mini-budget but acknowledged it had caused ‘turbulence’.But he rejected any suggestion that the parlous state of the country’s finances was the fault of the Truss administration.’The only thing that they could possibly blame us for is the interest rates and interest rates have come down and the gilt rates have come down,’ he said.’It wasn’t that the national debt was created by Liz Truss’s 44 days in government.’On September 23, Mr Kwarteng announced the biggest raft of tax cuts for half a century.Using more than £70 billion of increased borrowing, he set out a package which included abolishing the top rate of income tax for the highest earners and axing the cap on bankers’ bonuses, on top of a massively expensive energy support package.The mini-budget triggered turbulence in the financial markets, sparking an economic and political crisis that eventually led to Ms Truss’s resignation as prime minister.On Friday, Mr Hunt said: ‘When we produced a fiscal statement that didn’t show how we were going to bring our debts down over the medium term, the markets reacted very badly and so we have learned that you can’t fund either spending or borrowing without showing how you are going to pay for it and that is what I will do.’The Chancellor, who is due to deliver the Autumn Statement next Thursday, acknowledged that there was ‘some choice’ over the fiscal rules a government follows, but insisted that the UK had to ‘pay our way’.’There isn’t uncertainty about a basic choice we make as a country, which is whether we’re going to pay our way,’ he said.’And if we don’t give that certainty to the world, what we’ll see is higher interest rates, higher inflation, more instability, and more worries for families and businesses.’And that’s why it’s so important to show the world that we are a country that pays our way.’His comments come after new GDP figures found the UK economy had shrunk by 0.2% between July and September.He said that ‘if we are going to bring down debt over the medium term and give people confidence we are paying our way as a country, then yes, there is a very substantial gap in our national finances’.Adding that it was ‘not just us’, he said: ‘These are global factors, partly because of what’s happening in Ukraine, partly because of the pandemic, but all of us are having to come to terms with and the sooner we do that, the quicker we can give families and businesses hope that there is a way through the very difficult challenges we face.’