Jacob Rees-Mogg claims parts of economy in ‘good state’ and insists pensions safe

Parts of Britain’s economy are in “good state”, said business secretary Jacob Rees-Mogg despite negative growth, the falling pound, rising interest rates and fears for pensions.

Mr Rees-Mogg said official figures showing the economy shrank by 0.3 per cent in August was only “a small amount”, adding that the government stats “can’t be entirely relied on”.

He insisted that pension funds “aren’t at risk” – despite the pound falling again on Tuesday after the Bank of England governor warned its emergency plan aimed at protecting pensions would end on Friday.

Mr Rees-Mogg admitted his own mortgage payments had gone up in recent weeks. “Yes, mine has gone up,” he told Sky News. “Mortgage rates have gone up for everybody.”

But the business secretary that “there are bits of [the economy] in a good state” – highlighting low unemployment. “I think the economy has some good points and some areas of difficulty.”

Mr Rees-Mogg added: “There is a problem with inflation, and the difficulty with inflation is that monetary policy has to tighten, and if you tighten monetary policy it leads to higher mortgages and rates of interest for businesses. And that is never easy.”

The Lib Dems deputy leader Daisy Cooper said Mr Rees-Mogg was “denying economic reality”. She added: “He’s admitted his own mortgage has gone up, but won’t take the action needed to help the millions terrified of losing their homes as interest payments go through the roof.”

Mr Rees-Mogg also suggested that the Bank’s interest rates decision, rather than the mini-Budget, was the main reason for market chaos.

He clashed with BBC Radio 4 Today programme host Mishal Husain, who said investor confidence problems had been “sparked by the mini-budget”.

Mr Rees-Mogg said the turmoil was “not necessarily” down to the mini-budget. He added: “I think jumping to conclusions about causality is not meeting the BBC’s requirement for impartiality, it is a commentary rather than a factual question.”

He also refused to get drawn into speculation about whether the Bank of England should extend its emergency bond-buying programme beyond the end of the week.

The Bank intervened for the second time in as many days on Tuesday to prevent “fire sales” of pension fund assets, as traders continue to dump government bonds in the wake of chancellor Kwasi Kwarteng’s mini-budget.

Speaking in Washington DC on Tuesday night, Mr Bailey warned there could be no further extension beyond the end of the week.

“My message to the (pension) funds involved – you’ve got three days left now. You have got to get this done,” he said. “Part of the essence of a financial stability intervention is that it is clearly temporary.”

But the Bank of England has signalled privately to lenders that it is prepared to extend its emergency bond-buying programme beyond Friday’s deadline if market conditions demand it, the Financial Times reported, citing three sources.

The Pensions and Lifetime Savings Association (PLSA) warned against ending it “too soon” – suggesting the Bank should continue its emergency bond-buying scheme until the end of October or beyond.

Former pensions minister Steve Webb also said Mr Bailey may have to continue to scheme beyond 14 October help. “It’s perfectly possible, although a lot has been done, that more help will be needed from the Bank on Friday,” he told BBC Radio 4’s The World Tonight.

Grilled on the turmoil which followed the mini-Budget, Mr Rees-Mogg told LBC: “It is not abnormal for the Bank of England when a particular event take place that happens faster than is anticipated, or wasn’t anticipated.”

Liz Truss faces MPs on Wednesday for the first time since chancellor Mr Kwarteng’s £43bn mini-Budget tax giveaway unleashed chaos in the financial markets.

Senior Tory MP Mel Stride, chair of the Treasury select committee, suggested Ms Truss and Mr Kwarteng may have to U-turn on some of their tax cuts to win the support of MPs.

Mr Stride said “rowing back” on tax cuts “has to be on the table”. He told BBC Radio 4’s PM programme that if the choice became a fiscal plan which the markets “are just not going to buy” or U-turning on tax cuts, the chancellor had to be “brave”.

A senior No 10 official told The Independent that staffers have been tasked with re-examining measures unveiled in mini-Budget to see if changes or U-turns might be required.

The official said that staff “have been told to go through the measures and the OBR’s working line by line”.