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Liz Truss says she's sorry, faces deep spending cuts to balance books

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  • Truss says sorry for mistakes
  • He says he’s ‘stuck’
  • The economic agenda that caused the deterioration of the market was shelved
  • Some Conservative lawmakers urged him to resign

LONDON, October 18 (Reuters) – Prime Minister Liz Truss has apologized for threatening Britain’s economic stability after she was forced to shelve broad tax cut plans and instead embark on a “glamorous” program of public spending cuts.

After weeks blaming the markets and “global headwinds” for investors abandoning sterling and government bonds, Truss said he was sorry he had gone “too far and too fast” with his radical economic plan to save Britain from years of stagnant growth.

Markets, which hit rock bottom in the wake of the September 23 “mini-budget”, are still strained and now struggling to survive just six weeks after becoming prime minister, despite Truss’s finance minister Jeremy Hunt upsetting his plans on Monday.

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It was unclear whether Truss’ apology would quell a growing rebellion in the ruling Conservative Party and urge a handful of lawmakers to resign. Dozens of people fear they will lose their jobs in the next election.

Even one of his ministers said he couldn’t afford to make any more mistakes – which can be difficult when the government seeks deep savings that could deepen an anticipated recession. Hunt has already refused to guarantee the budgets of departments such as health and defense.

A new YouGov opinion poll suggested that even Conservative Party members who supported him as prime minister had second thoughts. More than half of the polled said he should resign, while a third wanted his predecessor, Boris Johnson, to replace him.

“I want to accept responsibility and apologize for mistakes made,” Truss told the BBC late Monday.

“I wanted to take action to help people with their energy bills, to deal with the problem of high taxes, but we went too far and we went too fast.” He added that he was “stuck” and although the statement was accompanied by a laugh, it would lead the Conservatives to the next election in about two years.

Parliament followed quietly on Monday as Truss smashed the economic plan Hunt had proposed less than a month ago, which had caused such a deep rout to the bond market that the Bank of England had to act to prevent its pension funds from collapsing.

‘GHOST PM’

For some in the party, the sight of a demoted prime minister in parliament provided little confidence that he could fight.

Welcoming Truss’s plan, the Daily Mail featured his departure from parliament Monday in a headline under the headline “In office but not in power,” while the supporting Sun newspaper called him the “Ghost Prime Minister”.

Armed forces minister James Heappey said his boss Truss could not afford to make any more mistakes.

Truss held a meeting with his cabinet team on Tuesday and would later speak to lawmakers, who were urged by some close to the government to abandon any move to overthrow him before the government presented its full financial plan on October 31. .

Truss was elected by Conservative party members, not by wider voters, on a promise by critics to slash taxes and regulations to stimulate the economy in a policy called a 1980s Thatcher-style return to a “dripping” economy.

But markets reacted so quickly that borrowing costs soared, lenders withdrew their mortgage offers, and pension funds were in shambles.

The Bank of England said a report in the Financial Times about a new delay in starting the sale of government bonds is false. The FT said it learned that senior officials are likely to decide that a delay is necessary after deciding that the gilding market has been “very distressed” in recent weeks.

Ryanair (RYA.I) boss Michael O’Leary described the UK’s economic situation as a “car crash”, which he blamed on the country’s decision to leave the European Union in 2016.

EXPENSE JAM

With Britain’s economic reputation crumbling, Hunt is now finding cuts in public spending, and Truss may have to go further than the government would have done had he not unleashed his economic plan at a time of rising inflation.

Torsten Bell, head of the Resolution Foundation, a think tank, told BBC radio the government may need to find public spending cuts of around £30bn ($34bn). last 10 years.

One area to spend right now is Truss’ broad two-year energy support package, which is expected to cost over £100 billion.

Hunt said the support for households and businesses will last until April before it’s reviewed, and he asked analysts to say families could face up to £5,000 energy bills next year.

On Monday, Hunt refused to guarantee previous policies, such as a commitment to increase pensions in line with inflation.

(1 dollar = 0.8807 pounds)

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Written by Kate Holton and Elizabeth Piper; additional reporting by William James, Andrew MacAskill, Kylie MacLellan and Paul Sandle; Editing by Raissa Kasolowsky and Gareth Jones

Our Standards: Thomson Reuters Trust Principles.

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