Chancellor Kwasi Kwarteng reportedly said ‘it doesn’t matter if sterling crashes’ in the aftermath of the Brexit referendum result in 2016.
The then-Conservative backbencher, who backed the Leave campaign, was heard making the remark outside the Groucho Club in Soho, according to the evening standard.
Joy Lo Dico, the reporter behind The Londoner Diary column at the time, said she found Mr Kwarteng talking “feverishly” into his phone after the result. “The markets are going crazy,” he told her.
The Brexiteer was then heard to say: “Who cares if Sterling collapses? He will come back. »
Mr Kwarteng faces massive market turmoil over his tax cut mini-budget, as a disastrous day for the pound saw Labor take its biggest lead in the polls over the Tories since over 20 years.
The pound stabilized in early trading on Tuesday as it recovered slightly from record highs of 1.0327 against the US dollar on Monday after traders panicked over the economic plans of Mr Kwarteng and Liz Truss.
Lenders were withdrawing some of their mortgages on Monday amid uncertainty following Mr Kwarteng’s £45billion tax cut package presented on Friday.
Senior Tory MP Huw Merriman – who backed former Chancellor Rishi Sunak for Tory leader – warned Ms Truss could lose voters ‘with policies we’ve warned against’.
A Conservative backbencher said The Independent this combination of the “disastrous” mini-budget and the fall of the pound had “significantly reduced” the Conservative Party’s chances of winning the next election.
“It’s been deeply damaging to our reputation on the economy – but that’s what happens when you have ideologues running the show. They’re like the tea party Republicans or the right-wing Corbynists,” said the deputy.
The senior official said fellow moderates felt there was no point in trying to change the leader as it would make the Tory party an “absolute joke” to the wider electorate and see another right-wing Tory base. “What the fuck is the point?” they said.
The Tory added: ‘The current mood is that the next general election cannot be won, so some of us are thinking about how you reshape the party after a defeat.
Another Tory MP said the mini-budget had seriously hurt the party’s upcoming election. “It didn’t improve our chances at all. The bankers bonus and the removal of the 45 pence rate was very strange and stupid. They’ll just wrap people in the red wall.
Gerard Lyons, the hard-right economist who advised Ms Truss, admitted the scrapping of the top tax rate had ‘frightened’ markets – saying he was confused by the move.
“I was against these little unexpected and unexplained tax changes on Friday,” Mr Lyons told Channel 4 News. “Even though on the scale of things they were small compared to reversing the tax increases, they spooked the markets.”
He added: “I think what we need to do, given the statements from the Treasury and the Bank of England, is to see how the market stabilizes in the coming days.”
The Treasury said the chancellor would announce a “medium-term budget plan” to start reducing debt levels on November 23.
And the Office for Budget Responsibility (OBR) will release its updated forecast for the current calendar amid widespread criticism that there was no update when Mr Kwarteng presented his ‘growth plan’ last week.
At one point, it was thought the Bank of England would be forced to step in with an emergency interest rate hike, fearing the pound would fall to parity with the dollar.
However, Governor Andrew Bailey said the Monetary Policy Committee, which sets interest rates, would carry out a full assessment of the impact on inflation and the fall in the pound sterling at its next meeting scheduled for April. November, then “would act accordingly”.
Shadow Health Secretary Wes Streeting said on Tuesday the ‘cavalry is coming’ as the latest YouGov poll shows Labor ahead 45% to 28%.
He added: “We have serious people, with a serious plan that would make a huge difference for families across the country and for businesses, which are the backbone of our economy and will be the foundation of economic growth. “