LONDON (Reuters) – Britain’s government has withstood the worst of financial markets’ “anxiety” following last week’s fiscal statement and will soon see a marked improvement, senior minister Simon Clarke said in an interview published in The Times late on Friday.
“The worst of the situation is already behind us in terms of that heightened anxiety in recent days,” Clarke, the secretary of state for levelling-up, housing and communities, was quoted as saying.
“Do I believe that we will see things improve very markedly as we move into 2023? Yes I do,” he added, The Times reported.
Sterling fell to a record low against the U.S. dollar on Monday, after finance minister Kwasi Kwarteng set out unfunded tax cuts in a Sept. 23 fiscal statement, but the British currency has since recovered these losses.
Government borrowing costs, however, remain markedly higher than before the statement and many British government bonds recorded their biggest monthly sell-off on record.
Clarke said the government needed to explain more about how it would control spending, as well as boosting growth.
“We have acquired spending habits that outstrip our ability to pay for it. That needs to change,” he said.
“I do think it’s very hard to cut taxes if you don’t have the commensurate profile of spending and the supply side reform,” he added.
Kwarteng has said he will set out a medium-term fiscal plan on Nov. 23, including full independent economic forecasts and proposals to reduce debt over the medium term.
Clarke added that there needed to be “real prioritisation” to decide which projects should come first among the multiple public investment commitments made by Prime Minister Liz Truss’ predecessor, Boris Johnson.
(Reporting by David Milliken; Editing by Leslie Adler and Sandra Maler)
