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Summary :

Meanwhile, Liz Truss and Rishi Sunak each took part in a televised leadership interview where the foreign secretary was challenged about the Bank’s projections as it increased interest rates by 0.5 percentage points.

Truss claimed her tax cut plans could avert the looming recession, while Sunak stepped up his criticisms of her £30bn plan for unfunded tax cuts, claiming it would lead to “misery for millions”.

Kwarteng, who is backing Truss to be leader, argued that carrying on with the current economic policy “is not going to cut it” and that raising taxes is “adding insult to injury”.

He defended the foreign secretary’s tax cuts plan, arguing that taking more of people’s money through tax when their real income is being squeezed by inflation “doesn’t make any sense”.

There is pressure on public finances but the immediate problem, as Liz always said, is one of growth. She talked about recession very early on, a few weeks ago, at the beginning of the leadership contest, and the risk of recession means that you can’t have rising interest rates, which we saw yesterday, and also have tighter fiscal policy. No economist in the world is going to say that the way to deal with a looming recession is to tighten monetary policy and to tighten fiscal policy at the same time.

The business secretary, Kwasi Kwarteng, who is backing Liz Truss in the Conservative leadership contest, has admitted that “I don’t know where Boris is” but insisted the prime minister is in “constant contact” with him.Johnson and his chancellor, Nadhim Zahawi, have been criticised for being on holiday on the day the Bank of England announced the biggest interest rate rise in 27 years and forecast an economic downturn lasting more than a year.The PM has been on holiday since Wednesday and Zahawi is away with his family and was not available for interviews in the wake of the BoE’s grim predictions.

When asked if the PM is on holiday, Kwarteng told Times Radio:

Speaking to LBC radio, Kwarteng said he believed the chancellor was “completely on top of the situation”. He added:

He’s completely aware of what’s going on and his officials and he are working very hard to see how best we can generally be we can deal with this. I think I think he’s on top of the situation. I think his arrangements are up to him.

He said it is “completely false” to say the government is doing nothing over the summer, adding on Times Radio:

I said we’re going to have to wait four weeks for an emergency budget because that’s how we help people – it’ll be through the new chancellor, new prime minister, whoever they are, to come up with the measures. But the idea we’re doing nothing in the meantime is false.Meanwhile, Liz Truss and Rishi Sunak each took part in a televised leadership interview where the foreign secretary was challenged about the Bank’s projections as it increased interest rates by 0.5 percentage points.Truss claimed her tax cut plans could avert the looming recession, while Sunak stepped up his criticisms of her £30bn plan for unfunded tax cuts, claiming it would lead to “misery for millions”.Kwarteng, who is backing Truss to be leader, argued that carrying on with the current economic policy “is not going to cut it” and that raising taxes is “adding insult to injury”.He defended the foreign secretary’s tax cuts plan, arguing that taking more of people’s money through tax when their real income is being squeezed by inflation “doesn’t make any sense”.There is pressure on public finances but the immediate problem, as Liz always said, is one of growth. She talked about recession very early on, a few weeks ago, at the beginning of the leadership contest, and the risk of recession means that you can’t have rising interest rates, which we saw yesterday, and also have tighter fiscal policy. No economist in the world is going to say that the way to deal with a looming recession is to tighten monetary policy and to tighten fiscal policy at the same time.

Here’s the agenda of the day.

9.30am: The Office for National Statistics publishes the results of its latest survey of the social impacts of the cost of living, goods shortages and Covid-19.

7pm: Truss and Sunak will meet in Eastbourne tonight for hustings with party members in the southeast.

I’ll be covering for Andrew Sparrow today. Do drop me a line if you have any questions or think I’ve missed anything. My email is leonie.chao-fong@theguardian.com or you can reach me on Twitter.