British PM Liz Truss apologizes but refuses to step down after scrapping controversial economic plan

British Prime Minister Liz Truss apologized for policy “mistakes” that caused investor confidence to evaporate and her poll ratings to plunge before nearly all of her economic plan was finally shredded on Monday, but she said she would not step down.

“I do want to accept responsibility and say sorry for the mistakes that have been made,” Truss told the BBC.

“I wanted to act but to help people with their energy bills to deal with the issue of high taxes, but we went too far and too fast.”

Chancellor of the Exchequer Jeremy Hunt, who was appointed on Friday after Truss sacked her close ally, Kwasi Kwarteng, jettisoned the remaining major planks of her economic agenda on Monday, including scrapping almost all of Truss’s unfunded tax cuts and scaling back her vast energy support scheme.

Asked if she was now prime minister in name only, Truss said she had appointed Hunt because she knew she had to change direction.

“It would have been completely irresponsible for me not to act in the national interest in the way where I have,” she said.

“It was right that we changed policy.”

Truss, who became Conservative leader less than six weeks ago, said she would lead her party into the next election.

“I’m sticking around because I was elected to deliver for this country,” she said. “And that is what I am determined to do.”

Economic wobbles continue despite U-turn

Hunt’s announcement sparked a rally in battered U.K. assets, but borrowing costs and mortgage rates remained well above where they stood before the plan’s Sept. 23 announcement, while some £80 billion ($125 billion Cdn) has been wiped off the value of London’s blue-chip FTSE stock index.

The pound is still down 16 per cent so far this year, making it one of the worst-performing major currencies.

That is bad news for consumers, since a weak currency pushes up the cost of imported goods, piling pressure on the Bank of England to keep hiking rates to contain inflation, which is running at almost 10 per cent.

The amount of borrowing that would have been needed to fund Truss’s tax cuts, combined with a huge cost of a cap on energy prices — originally £72 billion over the next six months alone — sent U.K. government bond yields, a proxy for borrowing costs, surging to their highest levels since 2008.

While those have come down significantly, Britain’s 10-year yield remain 45 basis points above levels before Sept. 23, and 30-year yields are some 55 basis points higher.

Rating agency Moody’s said turmoil in Britain’s government bond markets “jeopardized financial stability,” putting pressure on a broad range of financial firms from pension funds to banks and other lenders.