London CNN —
British Prime Minister Liz Truss admitted mistakes had been made in her government’s controversial “mini-budget” announced last week – which sent the pound to historic lows and sparked market chaos – but stood by her policy.
Speaking to the BBC’s Laura Kuenssberg on Sunday morning, Truss said: “I accept that we should have laid the ground better and I have learned from that and I will make sure that I will lay the ground better in the future.”
She said she wanted to “say to people that I understand their concerns about what happened this week and I stand by the package that we announced and I stand by the fact that we announced it quickly.”
Last week, the Truss government announced it would cut taxes by 45 billion, cutting 40% and a large increase in government borrowing to lower energy prices for millions of homes and businesses this winter.
Many leading economists have labeled the unorthodox measures as reckless gambling, noting that the measures came a day after the Bank of England warned that the country was likely already in recession.
Truss said the reforms were not decided by her cabinet, but a decision by Chancellor Kwasi Kwarteng. “It was the Chancellor’s decision,” she told the BBC.
However, she reiterated that decision, saying that her government made the “right decision to borrow more this winter to address the extraordinary consequences we are facing,” referring to the energy crisis caused by the war in Ukraine . She claimed the alternative was people paying up to £6,000 in energy bills and that inflation would be 5% higher.
“We don’t live in a perfect world, we live in a very difficult world where governments around the world are making difficult decisions,” Truss said.
Referring to the rising cost of living in the UK, particularly the rise in mortgage rates, Truss said this was mainly driven by interest rates and was “an independent Bank of England matter”.
The Bank of England said on Wednesday it would buy UK government bonds “to any extent necessary” in an emergency intervention to halt a bond market meltdown it warned could jeopardize financial stability.
Meanwhile, Credit Suisse said UK house prices could fall “slightly” by between 10% and 15% over the next 18 months if the Bank of England aggressively hikes interest rates to keep inflation in check.
The fallout could make it harder for people to get mortgages approved and encourage potential buyers to put off their purchases. A drop in demand would lead to falling prices.
Truss defended her government’s policy to the BBC as the annual Conservative Party conference in Birmingham got underway.
The party is bitterly divided, its poll numbers plummeting even under the disgraced leadership of Boris Johnson.
On Sunday that coldness was evident when Nadine Dorries, the former culture secretary who backed Truss as prime minister, accused Truss of throwing Chancellor Kwasi Kwarteng “under a bus” in her BBC interview when she said the tax cut decision was taken was struck by him and not by the cabinet.
“One of @BorisJohnson’s flaws was that he could be too loyal at times and he understood that. There is a balance, though, and throwing your chancellor under a bus on the first day of the conference really isn’t. [Hope] things are improving and calming down from now on,” Dorries said on Twitter.
Conservative MPs fear the combination of tax cuts and huge public spending to deal with energy bills, rising inflation, rising interest rates and a falling pound will make it impossible to win the next general election.