Lady isn't for turning...on public spending! Truss vows to stick to her pledge despite £60bn debt in PMQs

12 October 2022, 12:38 | Updated: 12 October 2022, 13:20

Liz Truss said today she will stick to her pledge not to reduce public spending.

Labour leader Sir Keir Starmer said the PM is “lost in denial."

Their exchange at PMQs comes after Chancellor Kwasi Kwarteng was told by the IMF he will have to find spending cuts of more than £60 billion if he is to meet his target to get the public finances back under control.

Sir Keir asked her at PMQs today: "During her leadership contest the Prime Minister said, I quote her exactly, 'I'm very clear, I'm not planning public spending reductions'. Is she going to stick to that?"

James O'Brien is completely astonished at Liz Truss

Ms Truss replied: "Absolutely. Look, Mr Speaker, we're spending almost £1 trillion on public spending. We were spending £700 billion back in 2010. What we will make sure is that over the medium-term the debt is falling. We will do that, not by cutting public spending, but by making sure we spend public money well.

"And (Sir Keir) talks about our spending, which he doesn't seem to support, on the energy price guarantee. But the reality is he can't criticise us on one hand for spending money and on the other claiming we're cutting public expenditure."

Sir Keir said to Tory MPs: "They can cheer. I hope they listened very, very carefully to that last answer because other people will have listened very, very carefully to it."

Read more: Mortgages, pensions and the value of the pound: How the economic turmoil might affect you

The ONS said this morning that Britain's economy unexpectedly shrank in August, reinforcing forecasts that the UK is on course for a recession as the cost-of-living crisis hits hard.

It said gross domestic product (GDP) dropped by 0.3% between July and August, down from growth of 0.1% the previous month, which was downwardly revised from the 0.2% previous estimation.

Economists had been expecting zero growth in August.

The latest data means the economy is likely to contract overall in the third quarter, with the ONS confirming there would need to be growth of more than 1% in September to avert a quarterly decline.

It comes amid fears that the UK is heading for a recession - defined as two or more quarters of falling GDP output - as the cost-of-living crisis takes its toll on households and businesses.