Rishi Sunak says Liz Truss could put UK into 'inflation spiral'

Tory leadership front-runner is facing scrutiny about her financial plans from a number of influential politicians

The winner of the Conservative Party leadership contest between Liz Truss and Rishi Sunak, one of whom will be named Britain's new prime minister, will be declared on September 5. PA

Liz Truss must choose between her unfunded £50 billion ($59bn) tax cuts or providing cost-of-living support — or risk plunging the economy into an “inflation spiral”, Rishi Sunak has warned.

The foreign secretary would increase borrowing to “historic and dangerous levels”, and place public finances in to “serious jeopardy”, if she attempts both, the Tory leadership candidate said.

Mr Sunak made the comments after Ms Truss, the front-runner to be the next UK prime minister, signalled she could help firms and households with rising energy bills with direct support this winter.

She was looking at assistance “across the board”, despite in the past insisting she was focused on tax cuts rather than what she termed “giving out handouts”.

"Liz's plans are promising the earth to everybody. I don't think you can have your cake and eat it. I don't think life is that simple, and I think her plan risks making everything worse," he said on Monday.

Ms Truss has argued that tax cuts will help to grow the UK's economy and boost prosperity.

The former chancellor also fuelled speculation that he may decline to serve in any Truss administration if defeated, as he suggested that ministers need to agree with a prime minister on the "big things".

Ms Truss, who is the frontrunner to replace Boris Johnson as prime minister, was urged to be more transparent with her plans for an emergency budget to address the cost-of-living crisis.

Mr Sunak insisted he is receiving a "warm reception" while campaigning even as he acknowledged that some Tory Party members are still angry at him for quitting Mr Johnson's Government.

The former chancellor said: "If I actually spent all my time looking at the polls or reading newspapers, I probably wouldn't get out of bed in the morning to do all these things."

The Sunak campaign said their rivals could trigger a dangerous bout of higher prices on a day when Citi warned that the UK faced an inflationary peak of 18.6 per cent, virtually double current levels, by January.

“The reality is that Truss cannot deliver a support package as well as come good on £50 billion worth of unfunded, permanent tax cuts in one go.

“To do so would mean increasing borrowing to historic and dangerous levels, putting the public finances in serious jeopardy and plunging the economy into an inflation spiral.”

UK Conservatives on the leadership campaign trail — in pictures

Candidates Rishi Sunak and Liz Truss at the Conservative Party leadership election hustings at Wembley Arena, London. This was the final hustings attended by Tory Party members who will vote for the new leader and next prime minister. EPA

Liz Truss addresses Conservative Party members at Wembley Arena. AP

Mr Sunak puts forward his case to be leader while speaking at Wembley Arena. Bloomberg

Mr Sunak visits his family's old business, Bassett Pharmacy in Southampton, while on the campaign trail. Reuters

Ms Truss speaks to staff at Condimentum Ltd at the Food Enterprise Park in Norwich. Getty Images

A Rishi Sunak supporter at a hustings event in Norfolk. PA

Mr Sunak greets people at a leadership hustings in Manchester. Bloomberg

Ms Truss poses for a selfie with a supporter as she arrives for the event in Manchester. Getty

Rishi Sunak looks through the sights of an anti-tank missile launcher, supplied to Ukraine, during a visit to the Thales Defence System plant in Belfast, Northern Ireland. AP

Liz Truss at a Conservative Party leadership campaign event in Belfast. Getty

Liz Truss meets supporters before a hustings in Perth, Scotland. Getty

Rishi Sunak speaks during a campaign visit to Cluny Castle in Inverurie, Scotland. Getty

Police hold back protesters outside Perth Concert Hall, Scotland, where Conservative leadership candidates Liz Truss and Rishi Sunak were speaking. PA

A mural showing the two leadership contestants appears on a wall in Belfast, Northern Ireland. AP

Rishi Sunak during a visit to St John's Wood Synagogue, north London. PA

Liz Truss at the Conservative Party leadership election hustings in Cheltenham. EPA

Rishi Sunak during a hustings event in Cheltenham. Reuters

Liz Truss speaks to scientists during a campaign visit to a life sciences laboratory at Alderley Park in Manchester. PA

Rishi Sunak during a campaign hustings in Darlington, England. Bloomberg

Liz Truss meets party members before she speaks at the Darlington campaign hustings. Getty

Rishi Sunak arrives for the Darlington hustings. Getty

Liz Truss plays pool during a visit to the Onside Future Youth Zone in London. Reuters

Rishi Sunak looks at a book with Teddy Openshaw, 4, as his father, Henry, looks on after a Conservative leadership campaign event in Ribble Valley, Lancashire, England. Getty

Liz Truss plays table tennis with former Conservative party leader Iain Duncan Smith during a visit to the Onside Future Youth Zone in London. Reuters

Liz Truss with supporters at a campaign event in Solihull, England. Reuters

Rishi Sunak attends a campaign event held by his party in Bexhill, England. Reuters

A protester is removed as Ms Truss speaks during the Conservative Party leadership hustings in Eastbourne. Bloomberg

Mr Sunak speaks at an event in Edinburgh. PA

Ms Truss leaves the hall in Exeter, south-west England, after her speech to a Conservative Party membership hustings. Getty

Mr Sunak speaks at the University of Exeter in south-west England. AP

A supporter of Ms Truss at a Conservative Party hustings in Exeter, south-west England. Getty

Ms Truss at a hustings event at the Pavilion conference centre at Elland Road in Leeds. PA

Mr Sunak in Salisbury watching a screening of the Uefa Women's Euro 2022 final between England and Germany at Wembley stadium. England won 2-1 in extra time. PA

Ms Truss before the Uefa Women's Euro 2022 final at Wembley stadium in London. AFP

Mr Sunak meets Tory members at Fontwell Park Racecourse. Reuters

Ms Truss at an event in Dereham, Norfolk. AFP

Mr Sunak in Ropley, near Winchester, Hampshire. PA

Ms Truss speaks as Conservative Member of Parliament Tom Tugendhat looks on at a Conservative Party leadership campaign event at Biggin Hill Airport. Getty

Ms Truss on the campaign trail in Woodford Green, on the outskirts of London. Reuters

Mr Sunak at a Conservative Party hustings event in Leeds. AFP

Ms Truss speaks at the hustings event in Leeds. AFP

Sunak and Truss-themed souvenirs at a stand during the Leeds hustings event. Reuters

Ms Truss, and her mother, Patricia, arrive for the hustings event. Getty

Ms Truss poses with supporters in Morley, England. Getty

Mr Sunak delivers a speech during a campaign event in Newmarket. AFP

Ms Truss and Jake Berry, MP for Rossendale and Darwen, during a visit to a broadband interchange company in Leeds. PA

Mr Sunak answers questions as he takes part in the hustings in Leeds. AFP

Ms Truss speaks at an event at a private house with members of the Conservative Party in Woodford Green. PA

Ms Truss and Mr Sunak pose for a picture before a BBC leadership debate at Victoria Hall in Hanley. Getty

Ms Truss addresses Mr Sunak during the televised debate. Getty

Mr Sunak, with daughters Krishna and Anushka, and wife Akshata Murthy, during a visit to Vaculug tyre specialists at Gonerby Hill Foot, Grantham. PA

Ms Truss speaks to people while campaigning in Marden. Getty

Ms Truss celebrates after being named, along with Mr Sunak, one of the final two candidates in the race to become the UK's next prime minister. PA

Mr Sunak outside his campaign office in central London. EPA

Ms Truss outside Downing Street in London. Reuters

Rishi Sunak meets Conservative Party members and activists, in Teesport, Redcar. Reuters

Conservative leadership candidates Mr Sunak, Ms Truss, Kemi Badenoch, presenter Julie Etchingham, Tom Tugendhat and Penny Mordaunt during 'Britain's Next Prime Minister: The ITV Debate' in London. EPA

Ms Badenoch arrives at Here East studios in Stratford, east London, before a live television debate. PA

Mr Sunak arrives at a London event to launch his campaign to be the next Conservative Party leader and UK prime minister. Reuters

Mr Tugendhat appears on the BBC One current affairs programme, 'Sunday Morning'. PA

Ms Badenoch, Ms Mordaunt, Mr Sunak, Ms Truss and Mr Tugendhat before the live television debate. PA

Ms Mordaunt arrives for the launch of her Conservative leadership campaign at the Cinnamon Club in Westminster. PA

Ms Truss speaks at the launch event for her campaign to become the next leader of the Tory Party and Britain's prime minister, in London. EPA

Chancellor of the Exchequer Nadhim Zahawi, one of the candidates who has been knocked out of the race, giving a speech at the Churchill War Rooms. PA

Former leadership candidate Jeremy Hunt appearing on the BBC One current affairs programme, 'Sunday Morning'. PA

Sajid Javid attending the launch of his campaign to be Conservative Party leader and prime minister, at the Cinnamon Club in London. He has since been knocked out of the contest. PA

Rehman Chishti is interviewed after announcing his bid to become the next prime minister. Mr Chishti is no longer in the race. Getty

Mr Tugendhat speaking at the launch of his campaign. PA

Culture Secretary Nadine Dorries and Conservative MP Iain Duncan Smith arrive for the Truss campaign launch event. Getty

Former leadership candidate Attorney General Suella Braverman at the Churchill War Rooms in central London. PA

Supporters of Mr Sunak wait for his arrival ahead of the campaign launch. Bloomberg

Mr Tugendhat makes a speech at the launch of his campaign. PA

Mr Javid mops his brow while launching his campaign. Getty

Ms Truss leaves for work after her announcement that she would be running for the leadership of the Conservative Party. Getty

The row comes before Ofgem’s announcement on Friday when the regulator is expected to raise the cap on energy bills from £1,971 to about £3,600.

The former chancellor’s team also seized on reports that Ms Truss is not planning to ask the independent Office for Budget Responsibility for a forecast ahead of the emergency budget she is planning for next month.

“It’s no wonder they want to avoid independent scrutiny of the OBR in their emergency budget — they know you can’t do both and it’s time they came clean about that now,” Mr Sunak’s campaign said.

Ms Truss’s economic vision and her reported plans for the OBR, which is required to produce two forecasts a year, is coming under increasing attacks from Tory critics.

“The Bank of England’s devastating outlook for the economy contrasts with Liz’s optimism — for her to now prevent the OBR doing proper analysis of the facts would seem to indicate complete loss of confidence in the policy she is advocating," Lord Griffiths, the Conservative peer who served as Margaret Thatcher’s head of policy, said.

Conservative heavyweight Michael Gove warned in an article for The Times that Ms Truss was on a “holiday from reality” with her plans for tax cuts during an economic crisis as he endorsed Mr Sunak.

Mr Gove, who served as levelling-up secretary until being sacked by Boris Johnson before his resignation as Tory leader, said Ms Truss’s vision puts the “stock options of FTSE 100 executives” before the nation’s poorest.

Everything you need to know about Liz Truss - video

Business Secretary Kwasi Kwarteng, a close ally of Ms Truss who is tipped to be her chancellor, insisted there would be fresh support this winter as energy bills soar.

“I understand the deep anxiety this is causing. As winter approaches, millions of families will be concerned about how they are going to make ends meet,” he wrote in The Mail.

“But I want to reassure the British people that help is coming.”

Ms Truss expressed optimism for the economy, saying there is “too much talk that there’s going to be a recession”, as she insisted an economic slump is not inevitable despite the Bank of England's forecast.

Everything you need to know about Rishi Sunak - video

In an interview with the Sun on Sunday, she said she was looking at help “across the board” in a hint that there could be more support for businesses and households.

So far, she has focused on cutting taxes, such as an immediate reversal of the national insurance increased, while Mr Sunak has focused on trying to bring down rising inflation.