Truss may face revolt if pound drops below dollar, MPs warn

IF the pound falls below the dollar Liz Truss could face a Conservative revolt, MPs warned yesterday.

The drop in sterling after Friday’s emergency Budget sparked alarm on the Tory benches, with MPs braced for further turmoil when markets reopen today.

Chancellor Kwasi Kwarteng yesterday played down the slump, which saw sterling hit a new 37-year low at $1.08.

He said he was focused on long-term growth, not shortterm market reaction.

But one Tory MP said: ‘The Chancellor is right not to be fixated on market movements but he’s kidding himself if he doesn’t think this stuff matters. If the pound goes below the dollar – or even hits a record low – that will be a very big moment.

‘I think you would start to see private muttering become public criticism pretty quickly.’ One Tory MP told the Sunday Telegraph colleagues would ‘hit the nuclear button’ if the pound sank below the dollar.

But an ex-Cabinet minister told the Mail the biggest threat to Miss Truss would come if interest rates continue to rise sharply. The source said there was ‘no chance’ MPs would revolt on the emergency Budget. But they added: ‘The level of the pound is obviously a concern, but I assume the Bank of England will do its thing and raise interest rates further.

‘If there is going to be trouble then that is where it will come from, because what use is a 1p cut in income tax if your mortgage has gone through the roof?’

Mr Kwarteng yesterday declined to comment on the market reaction.

He told the BBC: ‘If we can get some of the reforms... get business back on its feet, we can get this country moving and we can grow our economy and that’s what my focus is 100 per cent about.’