Warnings about the state of the UK’s economy held back by Kwasi Kwarteng when he was chancellor have been published.
They show the country’s financial situation had “worsened significantly” even before Liz Truss took over.
Under the Truss premiership, Mr Kwarteng refused to release advice passed to him by the Office for Budget Responsibility (OBR) before the government announced the support scheme for energy bills and, later, the mini-budget.
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The economic fallout from the spending and the lack of an official forecast spooked markets, pushing up government borrowing costs and putting certain pension funds on the brink of collapse.
Mr Kwarteng was sacked after trying to unpick his own financial plan, and was shortly followed out of the gates of Downing Street by Ms Truss.
Now, the OBR has released documents it prepared for Mr Kwarteng on his first day in office, following an order from the Information Commissioners’ Office.
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While they are not fully comprehensive forecasts, they highlight the struggling state of the UK economy in September 2022 following COVID, the invasion of Ukraine and rising energy costs.
The OBR explained the UK was on the precipice of a year-long recession, and government borrowing was set to rise by £21.8bn more each year until 2026/27, when compared to data prepared in the spring.
The report stated the “economic outlook has worsened significantly” since their last full forecast in March.
It estimated borrowing for the 2022/23 period was already set to be £144.1bn – “significantly higher”, again, than the March prediction. This is a rise of 6.1% of GDP, and compares to the March prediction of £127.8bn.
Much of this was due to interest payments on debt the government held going up.
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This rise wiped out much of the “headroom” – the extra money the government has to spend – from £27.8bn to £8.8bn.
Three days after Mr Kwarteng was sent the information by the OBR, Ms Truss announced the Energy Price Guarantee to help people with fuel bills, which was expected to cost tens of billions of pounds.
After the mourning period for Elizabeth II finished Mr Kwarteng revealed the administration’s totemic mini-budget, which increased borrowing even further to fund tax cuts which it was hoped would increase growth.
Markets reacted negatively to the plans – some blaming the lack of an official OBR forecast to go alongside Mr Kwarteng’s announcements.
This led to the collapse of the Truss administration and Rishi Sunak becoming prime minister.
A Treasury spokesperson said: “The document published reflects the OBR’s preparatory work sent to the then chancellor on his first day in office. The draft forecast did not include any policies ultimately announced in the Growth Plan.”
James Murray, Labour’s shadow secretary to the Treasury, said: “The fuse for the Tory mortgage bombshell was lit last autumn with their wild, unfunded tax cuts. Alongside that, the Conservatives’ irresponsible disrespect for independent institutions crashed the pound and sent interest rates soaring.
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“The reckless incompetence from the disastrous mini-Budget has left working people paying the price for Tory failure – with mortgage bills set to rise by £220 a month on average for those re-mortgaging.
“Labour’s economic plans will always be fully costed, fully funded, and built on the rock of fiscal responsibility. We recognise the important role played by the Office for Budget Responsibility and we will never disregard our independent economic institutions.”
