Tory leadership race: Liz Truss insists recession is ‘not inevitable’ as Rishi Sunak warns her plans will ‘make things worse’

Foreign secretary Liz Truss has claimed a recession is “not inevitable” as fellow leadership contender Rishi Sunak warned her plans would “make things worse”.

Mr Sunak claimed his opponent was pouring “fuel on the fire” and would cause “misery for millions”, as Ms Truss suggested the Bank of England warnings about plummeting incomes could be avoided with tax cuts.

Her comments came as the former chancellor claimed the issue was not taxes, but inflation, during a Sky News debate on Thursday night.

Ms Truss told the studio audience: “What the Bank of England have said today is, of course, extremely worrying, but it is not inevitable. We can change the outcome and we can make it more likely that the economy grows.”

Liz Truss, Kay Burley and Rishi Sunak ahead of the Sky News special programme 'The Battle for Number 10'. Picture: Chris Lobina/Sky News/PA Wire

She said she would she wanted to keep taxes low and “do all we can to grow the economy by taking advantage of our post-Brexit freedom, unleashing investment, changing things like the procurement rules and doing things differently”.

The South West Norfolk MP added: “Now is the time to be bold, because if we don’t act now, we are headed for very, very difficult times.”

Mr Sunak warned her plans would make the dire economic situation worse.

He said: “We in the Conservative party need to get real and fast because the lights on the economy are flashing red and the root cause is inflation.

“I’m worried that Liz Truss’s plans will make the situation worse.

“But it all starts with not making the situation worse, because if we just put fuel on the fire of this inflation spiral, all of us, all of you, are just going to end up with higher mortgage rates, savings and pensions that are eaten away, and misery for millions.”

Ms Truss also refused to apologise for her comments on Monday in which she called First Minister Nicola Sturgeon an “attention-seeker”.

Asked whether she would apologise to Ms Sturgeon if she met her as prime minister, Ms Truss said “no, I won't”, to laughter from the audience of Tory party members.

Ms Truss insisted she had nothing to hide, saying: “There are no skeletons in my closet.

“I think everything I’ve ever said and done is known about very publicly.”

There was also a heated confrontation with a member of the audience, with Ms Truss told her policies were “not sound economics”.

Ms Truss insisted: “It is important over the long term to make sure that the private sector is growing faster than the public sector and we are able to generate the revenues for our economy and also be able to pay for our public services.

“I think trying to balance the books prematurely is actually counterproductive because if you put up taxes and you stop businesses forming, you stop new investment and you stop economic growth, you’re less likely to be able to pay down the debt over the longer term.”

Asked if she was happy with the answer, the Conservative Party member said she was not.

She told Ms Truss: “Liz, I do not want to see my children and my grandchildren encumbered with huge debt at a time of rising interest rates … and at a time of high inflation.

"The one thing Margaret Thatcher believed in was sound money. This is not sound economics.”

It came as Boris Johnson and Chancellor Nadhim Zahawi faced criticism for being on holiday despite warnings of inflation further soaring and of the economy entering the longest recession since the 2008 financial crisis.

Mr Zahawi insisted he was still working and had a call with Governor Andrew Bailey after interest rates were hiked from 1.25 per cent to 1.75 per cent – the biggest increase for 27 years.

But Labour accused the Chancellor and the Prime Minister of being “missing in action” as the cost-of-living crisis deepened further, with the Bank forecasting inflation could peak at 13.3 per cent.

In a statement, Mr Zahawi said: “For me, like I’m sure lots of others, there is no such thing as a holiday and not working. I never had that in the private sector, not in government.

“Ask any entrepreneur and they can tell you that. Millions of us dream about getting away with our families, but the privilege and responsibility of public service means that you never get to switch off. That’s why I have had calls and briefings every day and continue to do so.”

Shadow treasury minister Abena Oppong-Asare said: “Families and pensioners are worried sick about how they’ll pay their bills, but the Prime Minister and Chancellor are missing in action.

“The fact they’re both on holiday on the day the Bank of England forecasts the joint longest recession in 30 years speaks volumes about the Tories’ warped priorities.”

Liberal Democrat foreign affairs spokeswoman Layla Moran added: “At a time of national crisis we deserve better than these shirkers. Time and again they have been absent in the country’s time of need.

“The very least the British people can ask for is a Chancellor and Prime Minister who will explain how they got us into this mess and what the plan is to solve it.”

Elsewhere, Sir Keir Starmer has been found to have breached the MPs’ code of conduct by failing to register on time eight interests, including gifts from football teams and the sale of a plot of land.

An inquiry into the Labour leader was opened in June by the Parliamentary Standards Commissioner, relating to claims about late declaration of earnings and gifts, benefits or hospitality from UK sources.

Speaking at the time, Sir Keir said he was “absolutely confident” he had not broken the MPs’ code of conduct.

The commissioner has now found the leader of the Opposition failed to register eight interests – five more than the ones alleged in the original complaint.

However, she noted the “breaches were minor and/or inadvertent, and that there was no deliberate attempt to mislead”.