LONDON: Britain’s new Prime Minister Liz Truss readied final details of a plan to tackle soaring energy bills, which looks likely to cool inflation but add more than 100 billion pounds to country’s borrowing.

On her first full day as Britain’s leader after replacing Boris Johnson, Truss told parliament she would support businesses and households who are bracing for a recession that is forecast to start later this year. A source familiar with situation told Reuters that Truss was considering freezing energy bills in a plan that could cost towards 100 billion pounds, a major turnaround from her rejection of “handouts” during early stages of Conservative Party leadership campaign. Deutsche Bank said energy price support and promised tax cuts could cost 179 billion pounds, or about half Britain’s historic pandemic spending push which dealt a blow to country’s public finances.

Truss ruled out demands by opposition Labour Party that she fund some of spending by raising taxes on energy firms. “I am against a windfall tax. I believe it is wrong thing to be putting companies off investing in United Kingdom,” Truss told lawmakers.  Her finance minister Kwasi Kwarteng, also on his first full day in job, said borrowing would be higher in short term to provide support for households and businesses and fund tax cuts.  “We need to be decisive and do things differently. That means relentlessly focusing on how we unlock business investment and grow size of British economy, rather than how we redistribute what’s left,” he told business leaders. BoE Chief Economist Huw Pill said plan could slow inflation which surpassed 10 percent in July although it was too soon to say what implications for central bank’s run of interest rate increases would be. 

Published in The Daily National Courier, September, 09 2022

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