UK's Rishi Sunak says Liz Truss tax-cutting plans will create ‘sugar rush boom’

Tory leadership hopeful grilled in TV interview by veteran journalist Andrew Neill

Veteran British journalist Andrew Neil stands with Rishi Sunak before he appears on 'The Andrew Neil Show'. PA

Rishi Sunak has denied his plan to tighten fiscal policy would lead to a recession and claimed rival Liz Truss’s ideas for vast tax cuts would create a “sugar rush boom”, as the campaign for the UK Conservative Party leadership continues.

Mr Sunak was grilled on the economy, immigration and his wife’s tax status for nearly half an hour by veteran political journalist Andrew Neil, with whom Ms Truss has so far declined to sit down.

He used the Channel 4 interview to take a fresh swipe at Ms Truss’s approach to tax, an issue that has dominated the bitter race for No 10.

Neil challenged the former chancellor over his plans to tighten fiscal policy at a time when “the global economy grinds to a halt, as monetary policy has been tightening”, suggesting he would “ensure a recession”.

“I think it’s absolutely the right thing to do to not put fuel on the fire of the inflation problem that we already have," Mr Sunak replied.

He added that a recession was “not the forecast of the majority of most independent forecasters here in the UK” and reiterated his priority was to “get to grips with inflation as quickly as possible because inflation makes everybody poorer”.

Mr Sunak also defended his policy to increase national insurance thresholds as “undoubtedly, objectively progressive” when Mr Neil suggested it penalised workers, and denied that his pledge to cut VAT on energy bills was an about-turn that demonstrated “bad judgment”.

On immigration, the former chancellor said there was a “finite amount” of asylum seekers the UK can accommodate when Neil pressed him on why he wanted to turn away even people who arrived legally.

He rejected Mr Neil’s assertion that his proposed cap on the number of asylum seekers accepted each year is “unsavoury”, as he argued for an “orderly” and “controlled” system for taking people in.

The millionaire ex-chancellor looked uncomfortable as he batted away questions about his wife’s previous non-domiciled tax status – an arrangement which reportedly saved her millions, saying: “I’m the one running for office and not my wife.”

Mr Sunak was seeking to regain his footing in the leadership race after rival Ms Truss won a major endorsement from Defence Secretary Ben Wallace.

Asked during a visit to Norfolk on Friday if she was confident she was now set to win the contest, the foreign secretary said: “I’m not at all complacent. I’m fighting for every vote across the country.”

In a thinly veiled swipe at the former chancellor’s record, she said it would be “risky” for the country to continue along the current economic path, "which is currently forecast to lead us to recession".

Ms Truss said the way to encourage growth is to “help people and businesses keep more of their own money”, saying the “number one priority should be avoiding recession”.

“What I’m talking about is unleashing opportunity, unleashing growth, keeping taxes low. That will see the economy grow and it will see us being able to pay back our debt quicker.”

The two candidates were questioned separately on an array of policy areas in hustings with Tory members on Thursday, the first of 12 sessions for the party faithful across the country to grill the final contenders before voting for the next Tory leader and prime minister closes on September 2.