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First Move with Julia Chatterley

Unfunded Tax Cuts have been Roundly Criticized by Investors; Jeremy Hunt Appointed UK Finance Minister; Awaiting Truss Presser, Finance Minister Kwarteng Sacked; "Mini-Budget" Triggered Drop in Markets, Value of Proud; Truss: Jeremy Hunt Shares my Desire for High-Growth, Low-Tax Economy; UK PM Truss Speaks after Sacking Finance Minister. Aired 9-10a ET

Aired October 14, 2022 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[09:00:00]

(COMMERCIAL BREAK)

RICHARD QUEST, CNN HOST, FIRST MOVE: Warm welcome to Washington. All I can promise you is an extremely busy hour ahead. Basically, the U.K. economic

and political system is in chaos today. As Kwasi Kwarteng, the Chancellor is sacked; a new Chancellor Jeremy Hunt has been replaced as Chancellor of

the United Kingdom here, the IMF and World Bank, which is where we are today.

Obviously, they will be discussing all these sorts of matters as the Chancellor leaving number 10 down in number 11 Downing Street this morning,

having just resigned his post? Well, it's interesting to see there's a little bit of political rivalry here. Was he sacked? Or did he put was he

pushed. In his letter to the Prime Minister, he says, you asked me to go and I've accepted in her letter to him.

She sorts of suggests you decided to leave doesn't matter. He's gone, as indeed has his number 2 Chris Phillips, new people are being put in at the

trial at the Treasury, Jeremy Hunt, who was actually not in favor of Liz Truss for the Prime Minister is the new Chancellor that has implications.

Now we're expecting let me tell you what we are expecting over the course of the next hour. We believe scheduled, the British Prime Minister is going

to give a press conference that should be in about half an hour from now. I guarantee you, we will take it live.

There is intense speculation that not only wills she have to justify what happened, but any changes in the mini budget. For instance, not having the

tax cut on corporation tax is one of the rumors that she might announce today. But the most important thing, I think, is the Chancellor being

fired. Let me remind you what the Chancellor said here in Washington at the IMF yesterday.

(BEGIN VIDEO CLIP)

KWASI KWARTENG, FORMER FINANCE MINISTER OF U.K.: Everybody is focused on inflation, everybody is affected by potential interest rate rises, and

everybody's affected by the energy price spikes, which have been exacerbated by Putin's illegal war in Ukraine. So everybody across the

global financial community is really focusing on the same problems.

UNIDENITIFIED MALE: And you'll be Chancellor and Liz Truss will be Prime Minister this time next month.

KWARTENG: Absolutely, 100 percent I'm not going anywhere.

(END VIDEOTAPE)

QUEST: Bianca Nobilo, absolutely, 100 percent I'm not going anywhere. The moment I heard that, I thought, Oh, well, you'll be off before a week next

Thursday.

BIANCA NOBILO, CNN CORRESPONDENT: Well, I mean, as we know, a week is very long time in politics has probably been the longest five and a half weeks

in politics that any Prime Minister's had after just getting into the job. I'm fascinated to see how the Prime Minister is going to try and draw a

dividing line between herself and the former Chancellor. If she is trying to put a lot of the responsibility for the economic crisis and the mini

budget squarely at his door and not her own.

I think that will be very interesting to see how she does that. Because even in both of their letters to each other as confused as they were. There

was a lot of wheat being used our policy, we had this achievement, or indeed because they were in lockstep and they do everything together.

So how is she going to try and draw the political dividends out of sacking such a close friend and ally? She's going to have to try and distinguish

them and position herself with as clean a political flavor as possible moving forward.

And the appointment of Jeremy Hunt is definitely an olive branch to the more moderate compassionate conservatives within her party, who have always

been quite uncomfortable at how she has thrown all of red meat to the higher right of the Conservative Party.

And they might be hoping this is a sign of Otter calm that she will leave with a more conciliatory, broad church approach. And she will have to

otherwise she will have a rebellion and a push to oust her even more pronounced on her hands.

QUEST: Yes, Max Foster, the markets I'm going to show you what the markets have been doing the pound and the pound against the dollar. And the

European goes as the FTSE and the FTSE is up, the pound is down.

[09:05:00]

QUEST: I mean, that really shows that until Max, I think we get details of the reverses, the new turns, the spending making up the shortfall. Max

Foster, that's not going to change.

MAX FOSTER, CNN CORRESPONDENT: Yes, I think you know better than me the markets are, you know, this is about reassuring the markets in the first

place. Because that's what's caused such chaos in the U.K. pushed mortgage rates up, which is essential knowledge for any conservative supporter

really? Because they tend to be homeowners it's all at absolutely cataclysmic for the Conservative Party this.

At the same time speaking to what Bianca was saying they're bringing in Jeremy Hunt was actually very central to this because one of the big

mistakes that Liz Truss made. According to the party is not bringing in any of Rishi Sunak supporters into the government in the first place. So

hopefully that can create some unity in the party.

Hopefully, whatever she says in this speech coming up, will reassure the markets and then she may have some chance of staying on for a while. But

even then, there Rishi Sunak support is very much operating in the background, trying to find a way of getting him into Downing Street and her

out because they see that as the long term best bet for winning the next election.

QUEST: And Bianca, Jeremy Hunt in this job? OK, Bianca, Jeremy Hunt was for Rishi Sunak. He's absolutely safe pair of hands in that respect. But, you

know, you've got cohabitants in the two top jobs that don't agree. And this is not just a minor bit of housekeeping.

He is viciously against the core tenant of her immediate policy, longer term, yes, all Tories are for low taxes, etcetera, etcetera. But in the

immediate term, he is against, he's not with her so how she going to square that circle?

NOBILO: We don't know yet. And I'm curious as well, to see how much latitude she gives him, you know, the Will this be coming directly from

her? Will the Chancellor will the power in the Chancellor's Office become bigger again? Because that push and pull of that relationship between Prime

Minister and Chancellor is a key one.

And usually, interestingly, it often spells the dying days of the government where the relationship gets so fractious, that the Chancellor is

pushed out. And obviously, we've just seen that today, but they were very close pairing. Obviously, Truss needs to demonstrate that she can work with

people who have very different opinions from her own; she needs to reassure the markets.

But I don't know how that's going to sit with the policies that she's built her very fragile platform to lead upon. There are no answers to that just

yet. I mean, something that perhaps has in common is the fact that Jeremy Hunt like Liz Truss was against Britain leaving the European Union.

And then took a slightly more Eurosceptic stance as time went on, obviously, Truss is now a full Brexitier and can see the opportunities

there. Also, she says, Jeremy Hunt is considered to be a safe pair of hands. He's taken on a lot more perhaps respect from the party since he's

been on the back benches.

He's held a number of cabinet positions Foreign Secretary, his defense, health and social care. But he's also had his own spattering of political

scandal. I think this should be reassuring, but it will just we don't know how they are going to work together. We don't know how personally that

they're going to interact.

Liz Truss does have a bit of a reputation for wanting high discipline on messaging, as in a kind of it's my way or the highway, you need to be on

board with what I'm saying. So she will need to change that. And this speech will be the first indication as to whether or not she is capable of

doing that.

But I don't think just putting Jeremy Hunt in the position of Chancellor is going to be enough to placate this party that is so divided can see it's

being trounced in the polls by Labor, it just it will not be enough. I really don't think so you have one chance to make a first impression. And

this has been her first month. And I think it's pretty much unrecoverable.

QUEST: Max and Bianca, don't go too far away, because I'm joined here in Washington by Raghuram Rajan, who Former Head of the Central Bank of India

and now of course at the University of Chicago. If we look at what we see this morning, I noticed the pound hasn't responded yet to the sacking of

the Chancellor.

So what's it looking for? What do you make of the chaos? And I emphasize now that he's not obviously the still at the Central Bank of India, you are

as now as a private individual.

RAGHURAM RAJAN, FORMER GOVERNOR, RESERVE BANK OF INDIA: Right, so exchange rates do what exchange rates do it's very hard to explain what they do.

However, I think what you need to think about right now is three things working. Higher interest rates, that's that interest rates are going up.

There's a lot of leverage that it's acting on. And the third things which people aren't paying much attention to liquidity.

[09:10:00]

RAJAN: What has been happening is Central Bank's flooded the markets with tremendous amounts of cash remember reserves went up trillions.

QUEST: Right.

RAJAN: Now they're pulling it back. Think of what happened in the U.K., you have these pension funds? Yes, the government announced this budget, gilts

fell pension funds running for cash, and they can't find it. That's a big problem. Liquidity is short, because Central Banks are withdrawing it right

now.

QUEST: OK, so if that is the scenario, first of all, do you think Governor Bailey, whether he calls it an extension or another bit of nifty footwork?

Does he have to essentially extend the support being given?

RAJAN: The primary role of Central Banks is to provide liquidity, right. So I don't think he has a choice, he cannot let the market for gilts collapse.

He has to come in now, of course he wants to withdraw.

The problem is the amount of liquidity they've supplied in the past makes it very tough for him to withdraw quickly, he has to withdraw slowly. It's

hard to fix a final date; I will not be in the market beyond this date. It is a tough situation. But he has to muddle through.

QUEST: Are you surprised? That's the sort of reaction that we're seeing in the markets today? I mean, what's it going to take? Assuming that we'll

ever get gilts back to where they were? What do you think it takes?

RAJAN: Well, I think we're seeing moves in the right direction, the government backing off. Because that was entirely against what the Central

Bank was trying to do. The big problem, of course, is to fight inflation without a severe fall in growth. And for that, you need both on the same

page.

QUEST: So let's talk about the wider issue of inflation. It's almost as if the worst scenario has arrived globally, inflation is entrenched. That's

exactly what they didn't want to happen.

RAJAN: Right? I would say not yet. But getting there because the longer you have these high rates of inflation, the more workers say, look, I want my

piece of it.

QUEST: That's happening.

RAJAN: That it's happening, but still not them still falling behind inflation in the U.S. We're if you look at wage rates, 7 percent growth,

inflation is 8.5. So yes, slightly below the point is when they start wanting to go ahead of it, then you get the spiral.

QUEST: How much further do you think rates have to go? Let's start with the U.S. because that's obviously the dominant rate. I mean, I assume 75 basis

points at the next meeting. Are you on that camp?

RAJAN: It's baked in, I wish the Fed could go slower, because what the Fed needs is time to see what the effects of its actions are.

QUEST: This is an interesting point.

RAJAN: Yes.

QUEST: In today's world where things move much faster, traditional monetary lag is what 6 to 9 months.

RAJAN: Exactly.

QUEST: We only really 6, 7 months in since the beginning.

RAJAN: Exactly it started very low.

QUEST: So we don't know what the effect has been really the first tranches.

RAJAN: Absolutely, so it takes time, which is why the Fed needs to buy time. The problem is, because there's a census behind the curve, it doesn't

have time, and therefore it has to do the 75. How many more 75 before it are gone too far? It has to slow down and start waiting to see what

happens.

QUEST: How much and this is a general point, how much is our Central Bankers, the victim in a sense of a faster moving world social media,

instant communications? You know, in the old days, you made a move, and you waited three weeks and saw what happened?

RAJAN: Yes, I think they can blame others. They have themselves to blame also, in this case, because they were behind the curve.

QUEST: Can I ask one last point, the British Business Secretary said, and the government in U.K. has said specifically that the disruption of markets

has nothing to do in the U.K. market have nothing to do with their policy. It's to do with the war. I can see why you are smile, the war in Ukraine;

it's to do with higher fed interest rates. He said it is that right?

RAJAN: Well, I'll tell you the little bit of it. That's right, markets are fragile. So yes, the reaction was large. But there was an action, which

caused that reaction. And I think that was the mini budget, which just didn't make sense if didn't add up.

QUEST: --this morning. Very grateful, thank you, sir! I appreciate it. As we continue, it is a special edition of "First Move". We are at the IMF and

World Bank. We're expecting the U.K. Prime Minister Liz Truss is going to speak the FTSE is reached a daily high we'll show you the numbers after the

break very busy morning. I promise you, we'll have it all for you right here. This is CNN.

(COMMERCIAL BREAK)

[09:15:00]

QUEST: Welcome back to the IMF and World Bank. You don't get days like this, every week. Thank goodness, I suppose. We're expecting the Prime

Minister, the U.K. Prime Minister Liz Truss to speak in about 12 minutes from now. Let's see if she's on time. And what you're going to talk about.

She sacked her Chancellor this morning Kwasi Kwarteng.

I can only imagine what it was like for him flying back to London last night. He should have been here at the IMF and World Bank. Instead, he made

the lonely flight back to London, where this morning he became the scapegoat for the disastrous policies that the markets have rounded.

Going against Jeremy Hunt, Former Foreign Secretary, Former Senior Minister Jeremy Hunt has been announced as the new Finance Minister. It is

interesting. We will expect to hear how wise and whereas. Jill Rutter is with me, the Political Commentator. Jill, lets us talk first of all about

Jeremy Hunt as the new Chancellor. What price do you think he will have exacted for agreeing to take the job thereby stabilizing the situation?

JILL RUTTER, SENIOR FELLOW, INSTITUTE FOR GOVERNMENT: I think that he must have laid down terms about having pretty full control of where the

government goes next too. If you'd like reset, after the problems that have reset the government since he denounced the mini budget.

So I would be very surprised if he's agreed to take this job without Liz Truss agreeing that he will have a pretty free hand to do what he thinks it

will take on the advice of his officials on the advice of the office for Budget Responsibility to be able to assure the markets that U.K. Government

does indeed have the public finances under control.

QUEST: Jill has the wrong person resigned today?

RUTTER: Well, what is very clear, I think what's very clear from the exchange of letters between the Chancellor, the outgoing Chancellor Kwasi

Kwarteng, and the Prime Minister Liz Truss is that they were always billed as very much of a team when Liz Truss came in as Prime Minister not very

long ago, of course, and appointed Kwasi Kwarteng. It was described as the closest pairing of a Chancellor and a Prime Minister, that the U.K. had

seen, comparable only perhaps the relationship between George Osborne and David Cameron who were, if you'd like joined at the hip.

[09:20:00]

RUTTER: So it's very difficult to say that it makes sense to sack Kwasi Kwarteng over the failure. If you like government economic policy, without

the Prime Minister also being seen as having to take responsibility for that failure because this was very much not a case of the Chancellor

pursuing an independent policy.

What he was doing was implementing the vision that Liz Truss set out in that very prolonged conservative leadership campaign. And that won her the

premiership from the Conservative members.

QUEST: Right, so, with that in mind, and I'm thinking, the work of the institute, looks at this closely, the failure of the Truss government, or

failure of Truss and Kwarteng to even advise the cabinet and discussing cabinet at the mini budget, and not to put it to the OBR. Does she have any

credibility left?

RUTTER: Well, we'll have to see. And I think the statement that she's about to make will be incredibly important to see whether that does give her the

space too. If you'd like, try to recover her premiership or not. So she's certainly not out of the woods yet, though, appointing Jeremy Hunt is an

indicator that she is prepared to look across party.

One of the things that were noted about that cabinet that she appointed back in early September, was that she shunned everybody who had supported

Rishi Sunak in the leadership election, with one exception who was appointed to a very, very low ranking, relatively politically insignificant

Cabinet posts. So Jeremy Hunt, very much a slightly surprising appointment reaching out someone who didn't serve under Boris Johnson did serve under

David Cameron and Theresa May. Supported remain so very much from a very different part of the party than Liz Truss has drawn her support from and

notably didn't spotless Truss and leadership. Does a really interesting move? I think it's really interesting whether the Prime Minister can

recover her personal credibility now. And that's the next few days weeks, we'll test if it was to have that long.

QUEST: Jill, thank you. Excellent work from the Institute for government and we're glad that you were with us today. Thank you very much. I want to

show the markets and how they are responding to all of this.

You've got the pound and versus the dollar. You've got the FTSE visa vie, the euro, the European so there you have the two now, it looks as though

the pound is, I'm sorry, the FTSE equities is doing well. It's got nothing to do with today.

Actually, if anything, the other European markets are up higher or have been than the FTSE on the back of a strong Wall Street. So what we're

seeing in equities is really to do with what happened on Wall Street. The pound is continuing down. It's all phony.

I say only half a percent this morning. Much will depend bond yields on gilts have been coming down slightly, but that's really again on other

issues. Kallum Pickering is with me. Excuse me from the London; the Senior Economist, Berenberg Bank joins me now. So I suppose we'll get into him in

detail. But the knee jerk reaction of the markets to the news that Kwarteng has gone does not seem to be the sort of positive reaction the government

might have hoped.

KALLUM PICKERING, SENIOR ECONOMIST, BERENBERG BANK: Well, I think the market essentially looks at these policies as the Prime Minister's

policies. Yes, the Chancellor, Ex-Chancellor by now Kwarteng was the architect, but this is brand Trussonomics. I fear actually, the problem

essentially remains for Truss.

It looks worse for Truss that the Chancellor is out within a month than it does for the Chancellor. The key thing for markets is the U.K. seems to be

making a significant U-turn on the fiscal policies that had panic gilt markets into wondering essentially whether or not the U.K. was on a stable

financial path.

QUEST: What U-turn do you just the markets what I was what do you want, but in market terms. We all know that the 45 percent reversal, that was just a

bit of froth icing on the cake, you didn't raise much money of course, abandoning the cut in corporate taxes, keeping the higher rate.

Will that be enough if that's announced? Or does that have to be more to explain how they're going to fill the shortfall, which has been made larger

by 15 or so billion because of higher gilt yields.

PICKERING: It's a really good question. I actually, the thing that I find curious about this whole situation is yes, the U.K. with Trussonomics would

be borrowing more money.

[09:25:00]

PICKERING: But actually, if you look three or four years out, the deficit would have probably been around 3 percent. The U.K. has the longest debt

maturity in the OECD. The U.K. wasn't on an unsustainable fiscal path. These policies wouldn't have actually put it on an unsustainable path.

The problem is, Truss doesn't have any credibility with markets, you didn't start with any credibility. And so what we have with this U-turn is

actually a bit questionable, and I'm not really sure what the market is looking for here. The market didn't take a sober analysis of the initial

policy decisions. That's why markets panic so much.

And so this U-turn probably is the sense that well, actually, we're heading now into it into a more sensible direction. Truss is not going to push

further, or at least expand these policies in a direction that could threaten U.K. financial stability. It's all very weird I have to say.

QUEST: That's a great explanation. I mean, that's that sums it up beautifully. Actually, it sums it up in the polite language that we can use

on television because it's a weird situation. Thank you, sir. I'm grateful for you.

PICKERING: Thank you.

QUEST: OK, we will take a very short break. We are expecting that the U.K. Prime Minister the Chancellor has gone well the old Chancellor has gone

that's what you're looking at. And that is number 10 Downing Street. That is where Liz Truss will be. She's meant to be there at 9:30 Eastern 2:30

London. Let's see if she's on time. We'll take it when it does. This is CNN likes to do.

(COMMERCIAL BREAK)

QUEST: Warm welcome to the IMF and World Bank in Washington. I'm Richard Quest in for Julia Chatterley. Today were live here of course, as the U.K.

reels from chaos and confusion.

[09:30:00]

QUEST: We're live here of course UK reels from chaos and confusion. This morning the British Chancellor Kwasi Kwarteng was sacked by the Prime

Minister Liz Tuss, she is due to speak anytime now, in about seconds from now, there's a new Finance Minister, new Chancellor Jeremy Hunt is the man

who will be taking over at number 11 Downing Street.

Bianca and Max are with me. And Bianca is outside number 10. Max is with me to give me the analysis and the broader tense. Max, I'm going to start with

you and - everybody other European countries and politicians are watching this in amazement, horror.

FOSTER: Well, I think you've probably found the same there, haven't you? Richard people are very awkward about talking about it, because it's very

difficult to say anything, which isn't very negative about the way everything's been handled really, from certainly from a European

perspective, in terms of the British economy in recent times, not least this recent period.

So this idea that Liz Truss and Kwasi Kwarteng would come out with this mini budget, as it was called, much bigger than it was implied and it

wasn't costed out, and then didn't respond. And what's the markets fall? It has an impact on the wider European economy. And I think there's a huge

amount of frustration.

So a massive tests for Liz Truss, as she comes out to that podium, and isn't just speaking to her own party isn't just speaking to the financial

markets is talking to the wider world and speaking on behalf of the United Kingdom, which just looks so chaotic right now.

This Jeremy Hunt is the fourth Chancellor Britain has had this year. Liz Truss if she goes would be, she's the second prime minister this year that

could be a third Prime Minister this year. What is going on with British politics? That's what so many people are wondering.

QUEST: Which is why we've got Bianca with us? Bianca, I mean, if Liz Truss uses the old line that they used on the 45 percent tax hit the air, it was

a distraction. And you can only be distracted for so long. They haven't used the word distraction yet.

But unless there's a touch of humility from the Prime Minister, as she comes forward, it's very difficult. Oh, looks like she's coming now.

Forgive me. No, she's not. I will interrupt you when we do see her.

NOBILO: Please do, yes. And that is the question that plagues me late at night. What on earth is going on with British politics indeed? And will it

change as well, because Jeremy Hunt himself was in favor of cutting corporation tax high spending, but also tax cuts.

So when he was running for leadership back in the day, which he has done twice, he was never considered to be a particularly fiscally sound choice

because of these policies that he espoused back then. But the key for Liz Truss today is to show some form of contrition, perhaps even apology or an

apology, although I think that is unlikely because the whole purpose behind the sacking of the chancellor is precisely so that she doesn't have to take

on that responsibility and be further tainted by the economic crisis that the mini budget has led to.

So I think that's unlikely. She doesn't tend to speak for a very long period of time, she isn't well known for being charismatic or particularly

warm, or taking the temperature of a room or a political moment particularly well. So this will be a great test. How do you spin this

because --?

QUEST: Here she is the Prime Minister - the Prime Minister Liz Truss.

LIZ TRUSS, BRITISH PRIME MINISTER: My conviction that this country needs to go for growth is rooted in my personal experience. I know what it's like to

grow up somewhere that isn't feeling the benefits of growth. I saw what that meant. And I'm not prepared to accept that for our country.

I want a country where people can get good jobs, new businesses can set up, and families can afford an even better life. That's why from day one, I've

been ambitious for growth. Since the 2008 financial crisis, the potential of this great country has been held back by persistently weak growth.

I want to deliver a low tax high wage high growth economy is what I was elected by my party to do. That mission remains. People across this country

rightly want stability. That's why we acted to support businesses and households with their energy costs this winter.

It's also the case that global economic conditions are worsening, due to the continuation of Putin's appalling war in Ukraine. And on top of this

debt were a masked helping people through the COVID pandemic. But it is clear that parts of our mini budget went further and faster than markets

were expecting.

So the way we are delivering our mission right now has to change. We need to act now to reassure the markets of our fiscal discipline. I have

therefore decided to keep the increase in corporation tax that was planned by the previous government.

[09:35:00]

TRUSS: This will raise 18 billion pounds per year. It will act as a down payment on our full medium term fiscal plan, which will be accompanied by a

forecast from the independent OPR. We will do whatever is necessary to ensure debt is falling as a share of the economy in the medium term.

We will control the size of the state to ensure that taxpayers' money is always well spent. Our public sector will become more efficient to deliver

world class services for the British people. And spending will grow less rapidly than previously planned.

I met the Former Chancellor earlier today. I was incredibly sorry to lose him. He is a great friend. And he shares my vision to set this country on

the path to growth. Today, I have asked Jeremy Hunt to become the new chancellor.

He's one of the most experienced and widely respected government ministers and parliamentarians. And he shares my convictions and ambitions for our

country. He will deliver the medium term fiscal plan at the end of this month.

He will see through the support we are providing to help families and businesses, including our energy price guarantee that's protecting people

from higher energy bills this winter. And he will drive our mission to go for growth, including taking forward the supply side reforms that our

country needs.

We owe it to the next generation to improve our economic performance, to deliver higher wages, new jobs, and better public services and to ease the

burden of debt. I have acted decisively today, because my priority is ensuring our country's economic stability.

As Prime Minister, I will always act in the national interest. This is always my first consideration. I want to be honest, this is difficult. But

we will get through this storm. And we will deliver the strong and sustained growth that can transform the prosperity of our country for

generations to come. I will now take questions. Can I start with Ben Riley Smith?

BEN RILEY-SMITH, JOURNALIST: Thank you, Prime Minister clearly a difficult day. Can you explain to the public why you think you should remain as Prime

Minister given you junk to keep tax cuts that led you to be elected and got rid of your chancellor?

TURSS: I'm absolutely determined to see through what I have promised to deliver a higher growth, more prosperous United Kingdom. To see us through

the storm we face we've already delivered the energy price guarantee making sure people aren't facing huge bills this winter.

But it was right in the face of the issues that we had, that I acted decisively to ensure that we have economic stability, because that is

vitally important to people and businesses right across our country.

UNIDENTIFIED MALE: Thank you. Prime Minister - I don't understand you're the one that wants to cut the rate. You still have a platform to live the

leadership of the Conservative Party on a platform to cut corporation tax. You and the chancellor, the x-chancellor designed this budget together in

lockstep we're told at times in secrets, the two of you, he has to go because of the fallout from it. How can you get to stay?

TRUSS: Well, my priority is making sure we deliver the economic stability that our country needs. That's why I had to take the difficult decisions

I've taken today. The mission remains the same. We do need to raise our country's economic growth levels. We do need to deliver for people across

the country.

We're committed to delivering on the energy price guarantee which people are already seeing in their bills. But ultimately, we also need to make

sure that we have economic stability, and I have to act in the national interest as Prime Minister, Chris Mason?

CHRIS MASON, JOURNALIST: --Prime Minister, but given everything that has happened, what credibility do you have to continue governing?

TRUSS: What I've done today is made sure that we have economic stability in this country. Jeremy Hunt as Chancellor is somebody who shares my desire

for a high growth low tax economy.

[09:40:00]

TURSS: But we recognize because of current market issues, we have to deliver the mission in a different way. And that's what we are absolutely

committed to do achieving that stability or what is a very difficult time globally? Robert Peston?

ROBERT PESTON, JOURNALIST: Prime Minister, the Former Tory Chancellor Philip Hammond who has just said that you have totally trashed the Tory

party's election winning reputation for economic competence. Will you apologize to your party?

TRUSS: Well, I am determined to deliver on what I set out when I campaigned to be party leader. We need to have a high growth economy. But we have to

recognize that we are facing very difficult issues as a country.

And it was right in the national interest that I made the decisions I've made today to restore that economic stability so we can deliver, first of

all helping people through this winter next winter with their energy bills, but also making sure that our country is on the long term footing for

sustainable economic growth. Thank you very much everybody.

QUEST: Well, that was extraordinary. One sort of listened to that it was watching the questions to the Prime Minister was like watching bullets

going against concrete. Questions about how have you any credibility? Will you say sorry? How did you get it so wrong? How does firing the chancellor

help?

They were all met with the same standard response of I am committed to high growth policy, I believe X, Y, Z. And with the final bit, I took decisive

action because of the markets disruption, conveniently ignoring of course, that the markets disruption was as a result of her policies. Bianca Nobilo,

I listened to that, with mounting incredulity, that should but at the same time, I don't think I've ever seen a more forlorn and weakened Prime

Minister, given a statement.

NOBILO: I was just about to say that, Richard. When you were talking about the questions hissing like bullets, as much as her answers were a bit like

talking to a brick wall, they were really obscure in test, you know, she is avoid, there's avoiding the question.

And there's just not acknowledging it whatsoever that she seemed entirely defeated her power language, the way she spoke her body language, there was

very low energy. That's unusual even for her. And as we were discussing before, she's not known as a powerful, compelling or energetic speaker.

It was remarkable. It's also confusing, because that speech, if you saw it written down, which is always a good way to look at important speeches, it

did not explain the events of today. She paid lip service to the Chancellor to the fact that they share the same objective that she still remains

committed to that ambition to grow the country's economy.

But more than anything, she wants economic stability. She can say these things who will believe them? I don't know. Ultimately, it was the Prime

Minister's responsibility along with the chancellor to chart this economic cause. And I don't feel like that speech just now would have been

particularly reassuring.

And also to add insult to injury, she again repeated this idea that that country has been in a phase of weak persistently weak growth, which is an

insult to the previous Conservative governance that she has also served them. So all in all, I don't think that would have done her many favors

Richard.

QUEST: Yes, I noticed of course, her dating on that her previous economic - weak economic growth goes back to 2008 of course, conveniently just before

they took office, conveniently ignoring that they've been in office for the last 12 years and 12 years of the week economic growth of which he's

talking about.

Max Foster let me read you a quote further from in response to a question she says we recognize because of current market issues, we have to deliver

the mission in a different way further and faster than the market is expecting. Well that's alright then Max?

FOSTER: Well, is the furthest she's gone in accepting and almost, you know, almost apologizing for you know what happened here? It doesn't sound like

very much but in Liz Truss language that is going quite a long way she's finally accepted they did something wrong.

The same issues that you and Bianca have with this press conference only four questions at the end repeating the same sort of mantra she always does

that won't satisfy the public.

[09:45:00]

FOSTER: I don't think it'll satisfy the part of politicians. And I certainly won't satisfy the journalist sitting in that room that this is a

major problem that she's been part of. And she isn't really accepting it in a very public way. And I think that's going to be a huge frustration.

But she has climbed down on the corporation tax, we'll have to see whether or not that reflects well on the markets. If it does, that might help her

but she's still got a massive leadership crisis on our hands I think, Richard.

QUEST: Let's look at the markets on that point, then, Max. Let's see how the FTSE has responded and how the pound has responded and bearing in mind

that well, there you have it. So the FTSE let's forget about that's another frolics of its own.

But Max, the pound was down about point six, it's now down point nine. So she's filled or she's put back 18 billion pounds into the corporate tax on

the corporate tax move, but nothing more than that the markets not impressed.

FOSTER: And the markets presumably also apprehensive about the Bank of England pulling back on the guilt buying as well. So let's see what the

markets do. I mean, they're driven by fear at the moment, if they keep going down this is a massive problem for Liz Truss.

What more can she does apart from sack her finance minister, and then get rid of the flagship policy that she campaigned on? She's done all of that

today. If that doesn't convince the markets, then surely, the parliamentary party is going to have to do something in terms of leadership, a very

nervous time for her but a very nervous time for everyone. And I think a massive frustration that she didn't take that opportunity to show more

contrition.

QUEST: All right, Max. Bianca, Bianca, I'm sorry, you're out in the rain in Downing Street, it looks like it stopped. But we will be back with you both

in just a moment. We'll take a short break and when we come back, we will wrap it up in terms of a day.

We'll bring you we will remind you of what happened and we'll look at where we might go next particularly the question for the anchor when we get to

it. How the Tory party would get rid of Liz Truss if they decided that she was such an electoral liability as what appear at the moment? What's the

mechanism that you would Liz Truss and she won't go after the break its "First Move" good morning.

(COMMERCIAL BREAK)

QUEST: Another astonishing day in UK politics first, the UK Chancellor gets fired. Then the UK Prime Minister Liz Truss gives her press conference

where she reverses U-turns another part of her mini budget by reinstating the higher level of corporate tax that she was intending to cut. And then

finally she says nothing at all about whether she's sorry or how she's doing it? [09:50:00]

QUEST: Oh, and if all that wasn't enough, she also appoints a new Finance Minister Jeremy Hunt, who didn't support her in the leadership campaign.

This was the Prime Minister this morning.

(BEGIN VIDEO CLIP)

TRUSS: But it is clear that parts of our mini budget went further and faster than markets were expecting. So the way we are delivering our

mission right now has to change.

(END VIDEO CLIP)

QUEST: So, Max Foster is with me. Bianca is with me. I guess the first thing let's look at the politics on this Bianca assume that that the party

is really wants to get rid of her, how do they do it?

NOBILO: So that is the question. The prevailing thought is that a prime minister is safe for a year from a vote of no confidence after they assume

the post. However, and this is very important, the Chairman of the Backbench Committee that basically oversees the process of ousting a Prime

Minister said that that only applies to prime ministers who have been freshly elected as in a general election.

So it might not apply to Liz Truss in which case, if a certain threshold of letters 15 percent of the Parliamentary Conservative Party around 54 MPs is

met, then that can trigger a vote of no confidence. If that doesn't happen, there is the possibility to change the rules.

These rules, after all, are made by the party. And that's when in the dying days of the Johnson Administration when he'd survived the vote of no

confidence, but things were going from bad to worse, they were discussing, OK, well, let's just change the rules. Let's say that we can challenge him

again, let's change the threshold. So that can be done so as yet undisclosed method could arise.

Then there's the traditional ways which are mass resignations, which would force the Prime Minister's hand like what ultimately did happen to Johnson.

So if people start resigning from Truss's government and she can't function, then she might have to go. There are also the men in gray suits,

elders within the party, grandees trusted advisors coming to her and saying you really can't go on like this. Those are the mechanisms.

QUEST: Alright, so lots - lots of ways that potentially. Max Foster Jeremy Hunts' first job is going to have to be to clean up the mess. And that

means either well bringing forward or in some shape, or form, having this fiscal statement that has been put off, brought forward and then delayed

once more.

FOSTER: Yes, and we can assume he's going to go along the lines of Rishi Sunak's campaign, which was pretty much the opposite of what Liz Truss was

doing. So we've got some insight there. He's a much empowered Finance Minister, because she's weak. And she needs him and she needs the support

of that whole Sunak side. So he's in a very strong position.

David Gork, a party elder, I think, as Bianca might describe him, has tweeted that won't do as a result of this press conference. And I think

this is the big issue that Liz Truss has gone - hasn't gone far enough. You talked about that corporation tax, U-turn that is going to save I

understand it's something like $18 billion a year, that isn't nearly enough to offset a lot of the losses that were in this budget, basically.

So I think a lot of the Tory backbenchers already saying, financially, this don't go far enough, which might be why the pound is falling. And

generally, there wasn't enough there to appease everyone. So I think the pressure is still very much on Liz Truss. And those mechanism mechanisms

that Bianca was describing right there, I'm sure will be at the forefront of some people's minds there in Parliament.

QUEST: Bianca how long has she got? How much time do you think the Prime Minister has? I was going to say to stabilize the ship, but it's not

stable. So what do you think?

NOBILO: Well, as you know, that's every political journalist favorite question ever, Richard. So thanks very much for asking. I'm not entirely

sure it's weird. There does seem to be a rhythm to the recent departures of Conservative Prime Ministers if we think about Theresa May, Boris Johnson

or Liz Truss.

If certain things happen, and a process does seem to unfold, that press conference that we just witnessed the questions from the journalists about

her having no credibility left. How can she continue and these are her policies too and then the responses we had the defeated attitude from the

Prime Minister.

It is something of the last days of administration. That's what it looked like. And that's what it felt like. It would take a politician of such sort

of nimble know how ingenuity and imagination to can talk themselves out of this disaster.

The refrain I was hearing at conference was that she had until Christmas to study the ship and convince people that she's the right person for the job.

[09:55:00]

NOBILO: So that's when I would have said, so a month or so, the biggest thing that's holding, holding the tide that's holding that back is the

Conservative Party, you have to ask themselves, essentially, I'm putting it crudely. But what looks more ridiculous going through, you know, five prime

ministers in six years?

Because if Liz Truss went, that would be the number or keeping a prime minister that is just dragging us further and further down in the polls.

And in some people's minds, raising the credible conservative legacy with the economy which of those things is worse?

And because they don't know the answer, it means we can't say how long the prime minister had had left? If there hadn't been so many change overs of

Prime Minister - she'd be out on--

QUEST: I'm going to need to stop it there Bianca. We've got more ahead. It's coming up to the top of the hour. We will look at the markets we will

put it all together. "Connect the World" is next.

(COMMERCIAL BREAK)

END