Defiant Liz Truss and Kwasi Kwarteng press on with tax cuts after talks with finance chiefs to reassure market nerves

LIZ Truss and Kwasi Kwarteng are pressing on with their tax cuts after holding urgent talks today with finance gurus to calm market jitters.

The PM and Chancellor agreed to “work closely” with the Office of Budget Responsibility to inject some confidence back into their plans.

In a bid to ease the market panic that risks whacking ordinary Brits in the pocket, they also agreed to receive an OBR forecast on October 7.

At a 48-minute meeting in No10 the PM and Chancellor reiterated their commitment to face “scrutiny” by the fiscal watchdog.

Despite the days of market gloom Ms Truss and Mr Kwarteng were dealt some good news as the pound recovered all its recent losses.

And official stats showed the UK had actually avoided a recession as the economy grew between April and July.

Senior Tories welcomed the attempt to reassure nervous traders that the Government was committed to economic discipline amid the huge borrowing spree. 

But critics said Ms Truss and Mr Kwarteng were “locking the stable door after the horse had bolted” after they initially refused to publish an OBR forecast alongside last week’s Budget.

In key developments:

• Benefits are facing a squeeze as ministers may not increase them with inflation
• Britain actually avoided sliding into recession according to revised official figures
• Labour opened up a 33-point lead over the Tories according to one shock poll

Financial Secretary Andrew Griffith insisted today’s crunch meeting with the OBR was important as ministers planned a raft of new policies in the coming weeks.

He said: “There’s a lot of measures about how we’re going to grow the economy, the detail is yet to come out.”

Announcements on planning, immigration and strikes are set to be made in a supply-side reform blitz.

Ms Truss yesterday stood firm and stared down calls for a U-turn on her tax-cutting blizzard.

The Chancellor was slammed for rejecting the OBR’s offer of an economic forecast before embarking on last Friday’s £45billion worth of tax cuts. 

Experts blamed the lack of a forecast on the market panic that saw the pound plummet against the dollar and led the Bank of England to announce an unprecedented £65billion bailout.

Sterling rallied slightly yesterday after the Bank’s intervention to buy Government bonds to save the pension industry from collapse.

Mel Stride, Tory chair of the Treasury Committee, warned Mr Kwarteng was facing a “very difficult conversation” with OBR boss Richard Hughes today.

He said: “The judgement so far of markets is that what was announced last Friday doesn’t stack up fiscally and some changes are going to need to be made,” Stride tells BBC Radio 4’s Today Programme.

“Possibly now we can have a major reset moment in which confidence can be regained.”

Mr Griffith also hinted the Government’s plan to wrestle down debt could now be moved forward from the scheduled date of November 23.

He said: “The quicker we can get to a position that we are able to lay out our plans for growth, make sure that the OBR can understand those, reflect them in the forecasts, and get those forecasts out in the market.”

Mr Griffith refused to rule out reports that Universal Credit payments will not be uprated in line with inflation as Rishi Sunak had promised.

The fallout of last Friday’s seismic “mini-Budget” has seen the Tories tank in the opinion polls.

A YouGov survey last night gave Labour a record 33-point lead, however others show Sir Keir Starmer ahead by a small margin.