Chancellor will be vindicated over mini-budget, say county's Tory MPs

Chancellor Kwasi Kwarteng will be vindicated over his controversial mini-budget, say Conservative MPs in Shropshire.

Chancellor Kwasi Kwarteng
Chancellor Kwasi Kwarteng

Friday's 'fiscal event', which saw cuts to both the basic and upper rates of income tax funded by borrowing, were greeted with a nervous reaction by the money markets.

Sterling fell to its lowest rate against the dollar since decimalisation in 1971, before rallying yesterday.

Gilt yields – effectively the interest rate on government borrowing – also rose, and several mortgage lenders responded by closing to new business.

However, the county's Conservative MPs called for calm, saying the measures should be judged on their long-term impact rather than short-term fluctuations.

Daniel Kawczynski, MP for Shrewsbury and Atcham, said he stood fully behind the Chancellor's package

He said: "Over the coming months his very courageous, bold and innovative programme will see the country avoid a long and deep recession, creating the right economic framework for businesses to drive the economy forward.

"I think it would be wrong to judge or assess a major macroeconomic decision simply by the reaction of the money markets in the hours that follow.

"I think the strategy in this case will be proved in the coming months and years, with a lower-tax economy, with lower regulation and lower unemployment, as businesses and families have more of their hard-earned income left to spend as they want."

Mr Kawczynski added that the Government had only been able to borrow the money to pay for the stimulus because of the careful financial stewardship over the past 12 years, which had seen the fiscal deficit fall from £178 billion in 2010 to £8 billion in 2019.

"For an economy the size of ours, that it is practically running a balanced budget," he said.

Mark Pritchard, MP for The Wrekin, said he was confident the money markets would settle down in due course.

"Tax rises do not help grow local or national economies," he said.

"The markets will settle and inflation will come down. Economic policy cannot be dictated by the always volatile markets, but approached in a wider macro and fuller context."

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