UK Truss’ spokesman: no comment on markets, sticking to fiscal plan

By Alistair Smout and Kylie MacLellan

LONDON (Reuters) -The British government does not comment on market moves and is sticking to the fiscal plan it laid out last week, a spokesman for Prime Minister Liz Truss said on Monday, after the pound plunged to a record low against the dollar and British bonds sunk.

The major sell-off in British assets followed finance minister Kwasi Kwarteng’s Friday fiscal statement which cut a raft of taxes without detailing how it would be funded.

Kwarteng, Chancellor of the Exchequer, on Sunday declined to comment on the freefall in the pound, saying he was focussed on longer-term growth and not short-term market reaction.

“The chancellor has made clear that he doesn’t comment on the movements around the market and that goes the same for the prime minister,” Truss’s spokesman said.

The spokesman said there were no plans to make any changes to the measures set out, which he described as “a plan for the medium- to long-term, which is about fundamentally changing our approach to the economy with a focus on growth.”

Kwarteng has put the onus on the Bank of England to contain any inflationary effects of the massive fiscal expansion, last week telling governor Andrew Bailey he expects the central bank to take the forceful action necessary to contain inflation.

Asked whether the government expected the BoE, rather than ministers, to do the heavy lifting on containing inflation, Truss’s spokesman said a package to help households with energy bills could take 5 percentage points off inflation.

“It is right that we consider how best to control inflation, and of course, that’s something the government is mindful of,” he said, adding any future tax cuts – hinted at by Kwarteng on Sunday – would be for the finance minister to set out.

“It’s for the chancellor to set out any changes or any potential changes at a future fiscal event.”

He said it was a long-standing government policy not to comment on interest rates, other than to say it was important the Bank of England remained independent, though Bailey was in regular touch with Kwarteng over the state of the economy.

Asked if the finance ministry and BoE were working in concert, the spokesman said “the chancellor has made clear that they are.”

“He is in discussion regularly with the Governor of the Bank of England to share views on how best to grow the UK economy,” he said.

(Reporting by Alistair Smout and Kylie MacLellan; Editing by Toby Chopra)