No 10-Bank relationship at new low

RELATIONS between the UK Government and the Bank of England are at ‘a historic low’ after Chancellor Kwasi Kwarteng’s mini-Budget, Whitehall insiders have said.

Tensions have mounted after Liz Truss’s conference speech last week, in which she promised to strip away EU red tape by the end of 2023. Sources say this is a year sooner than most at the Bank were expecting.

Insiders say the Bank’s hierarchy was ‘blindsided’ by the promise, throwing it into fresh turmoil after its emergency £65billion package to stem a crisis in the market. While Ms Truss and Mr Kwarteng have drawn up an ambitious package for growth, the bank’s antiinflation measures are likely to slow the economy down.

It is expected to deliver a sharp interest rate rise next month, with a further possible hike in December. A Whitehall source said: ‘Truss keeps referencing the Bank’s responsibility for interest rates which looks like an attempt to shift the blame for away from her own Chancellor.

‘Now she has said this about EU red tape, presumably so she can blame the Bank when it misses the deadline.’