British leadership frontrunner Liz Truss said on Thursday she would use an emergency budget to help grow the economy after the Bank of England (BoE) raised interest rates by the most in 27 years and warned that a long recession was on its way.
“We need to take immediate action to deal with the cost of living crisis, grow the economy and delivering as much support to people as possible,” Truss, Britain’s foreign secretary, said in a statement.
“As Prime Minister, I’d use an emergency budget to kickstart my plan to get our economy growing and offer immediate help to people struggling with their bills.”
The BoE also warned that consumer price inflation was now likely to peak at 13.3% in October – the highest since 1980 – due mostly to the surge in energy prices following Russia’s invasion of Ukraine.
That would leave households facing two consecutive years of declines in their disposable incomes, the biggest squeeze since these records began in 1964.
“Today’s news underlines the need for the bold economic plan that I am advocating,” Liz Truss said.
Truss, the frontrunner to succeed Boris Johnson as leader of the Conservative Party and prime minister, has pledged immediate tax cuts if she wins the leadership contest. Rival candidate Rishi Sunak has warned her plan could stoke inflation.
“My tax cuts are necessary, affordable and not inflationary,” Liz Truss said on Thursday.
