Tory leadership - live: Sunak warns ‘we’ll lose election if inflation rampant’ as Truss heckled

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Liz Truss at Sky News’ The Battle for Number 10 last night insisted a recession is not inevitable when asked about the Bank of England’s forecast for an outright recession and 13 per cent inflation.

She 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.”

She said 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”.

On the other hand, the former chancellor warned Ms Truss’s plan would make the dire economic situation worse, warning of “misery for millions” by pouring “fuel on the fire”.

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.”

Rishi Sunak has accused Liz Truss of economic plans that would pour "fuel on the fire" just hours after the Bank of England warned the UK was heading for a recession.

The former chancellor, who has argued that Ms Truss’s planned tax cuts are inflationary, told the Tory leadership debate organised by Sky News: “I’m worried that Liz Truss’s plans will make the situation worse.”

Kate Devlin has more:

Business leaders have voiced their concern over Liz Truss’s plans for a bonfire of Brussels regulations, after she said slashing EU red tape would be “a priority” in tackling the expected recession, writes Andrew Woodcock.

Speaking ahead of a business round-table on Friday, the frontrunner to succeed Boris Johnson announced plans for a working group of industry leaders to help draw up new UK-only regulations in time for a “sunset deadline” of 2023 for the abolition of EU-derived laws which she believes are holding back the economy.

But the Institute of Directors made clear that diverging from EU rules was not a demand of companies facing a cost of living crisis which the Bank of England believes could result in inflation above 13 per cent and five consecutive quarters of negative growth.

Read more:

As Coleen Rooney might put it, the big revelation from the Sky News prime ministerial double-header was that the winner was.......... Rishi Sunak. Presenter Kay Burley declared, betraying nothing more or less than the media conventional wisdom, “I wasn’t expecting that”.

Perhaps, on the day the Bank of England forecast a year-long recession and 13 per cent inflation, the Tory membership is starting to realise they probably need someone leading them who has a passing acquaintance with economic sense? I wonder.

Read this from Sean O’Grady on yesterday’s Tory debate here:

As Tory candidates clash over their economic policies, read what the Bank of England said about a possible recession from our chief business commentator James Moore.

From skeletons in their closets and clashes over their economic policies as the Bank of England warns of a long recession, Liz Truss and Rishi Sunak have discussed at length a range of topics during their latest televised debate.

The two Tory leadership hopefuls took part in Sky News’ The Battle for Number 10 on Thursday night, which saw them separately taking questions from party members.

They were also both interviewed by Sky News’ presenter Kay Burley.

Here are the key points raised during the 90-minute-long TV event:

Rishi Sunak has insisted that there is no point in which he would stand aside for Tory leadership rival Liz Truss, despite multiple polls placing the foreign secretary significantly ahead of the ex-chancellor.

Mr Sunak insisted he will “fight incredibly hard ‘til the last day” of the leadership campaign, telling a Conservative party member in the audience that “the quick answer is no” when questioned whether there is a point at which he would step aside in the race to be leader.

He said he is “fighting for something I really believe in and wants to “try and convince you all that I’m right”.

Boris Johnson and chancellor Nadhim Zahawi are on holiday despite warnings of inflation further soaring and of the economy entering the longest recession since the financial crisis.

With ministers taking a back seat as the Tory party is gripped by the leadership contest, both men were away from Westminster when the Bank of England detailed the brutal outlook.

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%.

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Liz Truss is facing the possibility of her first major sleaze probe amid claims she failed to declare “murky donations” related to her leadership campaign.

Labour yesterday appealed to the cabinet secretary to open an investigation into the Tory frontrunner over funding for a so-called “Fizz with Liz” champagne dinner.

The Independent reported that Ms Truss was facing questions about why she did not declare the thousands of pounds worth of hospitality spent on schmoozing Tory MPs.

Our policy correspondent Jon Stone has more: