Brexit: Liz Truss mini-Budget saw EU divorce bill soar by £91m
Former PM’s disastrous tax-cutting plan piled an extra £91m on the UK’s payments to the bloc, Treasury documents show
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Your support makes all the difference.Liz Truss’s mini-Budget caused the UK’s EU divorce bill to soar by tens of millions of pounds because of the resulting crash in the value of the pound.
The disastrous tax-cutting plan piled an extra £91m on the UK’s payments to the bloc required as part of the deal to leave, Treasury documents show.
Ms Truss and her chancellor Kwasi Kwarteng quit after the budget last September, which sent the pound into freefall and saw it plunge to a 37-year low.
And the Treasury’s annual report showed a £91m loss on the UK’s financial settlement with the EU caused by “foreign exchange movements”.
The loss arose because the UK pays the settlement in euros, meaning the cost of meeting the payments rose sharply due to the hit the exchange rate took.
Half of the £91m came from an €855m payment, which cost £764m at a time when £1 was worth €1.12. By the time the UK paid the bloc in April, the exchange rate was £1 for €1.18, Reuters reported.
Labour shadow treasury secretary James Murray said: “This is yet more evidence of the ruinous damage done to the UK’s public finances by this Tory government, handing over millions more to the EU than should have been paid, after their reckless policies sent the pound into freefall.”
The fallout from the mini-Budget saw former US Treasury secretary Larry Summers claim Britain "will be remembered for having pursued the worst macroeconomic policies of any major country in a long time".
And the chief economist of the UBS bank said the economic policies pursued by Ms Truss and Mr Kwarteng were like a “doomsday cult”.
In July it emerged spending watchdog the Office for Budget Responsibility (OBR) had warned him ahead of the mini-Budget that Britain was facing a year-long recession and higher interest rates.
Hedge funds betting against the pound made significant gains in the wake of the crash that followed.
And Labour has repeatedly touted the “Tory mortgage bombshell” resulting from the spike in borrowing rates that followed.
A Treasury spokesman said: “Foreign exchange fluctuations are expected over the lifetime of the Withdrawal Agreement.”
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