Painful spending cuts on the way as economy is in worse state than after 2008 crash, Liz Truss warns

LIZ Truss warned her Cabinet to get ready for painful spending cuts – as the economy is in worse state than after the 2008 crash.

The PM told her ministers there are “no easy choices” ahead – but borrowing had to be hiked for the energy bills bailout to avoid “intolerable human cost”.

Truss and Chancellor Kwasi Kwarteng have now seen a draft of the Office of Budget Responsibility’s independent assessment of their plans with one government source warning their forecast was “dire.”

It will be published on October 31, alongside how much benefits will be increased by next year.

Ministers are at war over whether to hike Universal Credit payments by the rate of inflation, or a real terms cut by only uprating by the same amount wages have risen this year.

Treasury Chief Secretary Chris Philp told MPs yesterday: “We are going to balance considerations of fairness and the cost of living pressures that people suffer with the interests of the taxpayers who are working hard to pay tax.”

But ex-Cabinet Minister Julian Smith warned the Government off “balancing forthcoming tax cuts on the backs of the poorest people in our country.”