The government has defended its mini-budget following market turmoil and a higher cost of borrowing.
The government has been defending its mini-budget, following days of turmoil on the markets, a fall in the value of the pound and rises in the cost of UK government borrowing and mortgage rates.
Mr Rees-Mogg said: "It's much more to do with interest rates... than it is to do with a minor part of fiscal policy."It is true that interest rates have been rising around the world as central banks, including the Bank of England , tried to control inflation, made worse by Russia's invasion of Ukraine and the energy price shock which followed.
But Mr Kwarteng went further, announcing he would cut the basic rate of income tax a year earlier than expected and get rid of the top rate altogether. He subsequently reversed his decision to scrap the top rate.The package of tax cuts announced in the mini-budget totalled £45bn and were unfunded in that the government did not set out what savings it might make.
On Monday 26 September, the pound fell to record lows against the dollar in early trading in Asia. There was also a sharp rise in the cost of long-term government borrowing. Long-term gilt yields had gone up 0.5 percentage points by the end of the day, according to the BoE.
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