Liz Truss and Kwasi Kwarteng have been accused of “playing A-level economics” by a former minister amid rumours that MPs are already handing in letters of no confidence in the Prime Minister.
As concern mounts after the pound hit a record low against the dollar, one MP warned that Ms Truss would be in danger if interest rates begin to rise.
The MP told The Telegraph backbenchers were “petrified” by the impact of higher mortgage costs on their chances of keeping their seats.
On Monday, economists warned that the Bank of England may have to step in and put up interest rates in a bid to curb inflation, expected to rise following the Government’s tax cuts.
One former minister told Sky News: “Liz is f-----. She is taking on markets and the Bank of England. Her, Kwasi, [Chris] Philp and Simon [McGee] are playing A-level economics with people’s lives. You cannot have monetary policy and fiscal policy at loggerheads. Something has to give.”
Mr Philp is the Chief Secretary to the Treasury and Mr McGee is the joint communications director at Number 10.
The ex-minister also claimed moves to trigger a vote of no confidence in Ms Truss’s leadership were under way.
“They are already putting letters in as they think she will crash the economy,” he said. “The tax cuts don’t matter as [they are] all noise anyway – mainly reversing back to the status quo this year.
“The issue is government fiscal policy is opposite to Bank of England monetary policy, so they are fighting each other. What Kwasi gives, the Bank takes away.”
Another Tory MP told The Telegraph that there was at present no organised move against Ms Truss, but said that would change if interest rates begin to rise.
“I’ve had calls from people on opposite ends of the party ringing me up, because there are a lot of people worried about their seats and the long-term future of the party,” said the MP.
“They are petrified of the prospect of interest rate rises. The reality is kicking in about what that would mean for ordinary households. There is a real danger that the Finance Bill could face massive problems.
“There is an element of licking of wounds at the moment, and there is no organising. If interest rates are hitting four per cent by Christmas, MPs are going to be going bananas. Liz has a small window, because there’s no organised move against her. But that will change with interest rates.
’The May local elections will be fascinating, because she should be on course to gain 500 or 600 seats. If she doesn’t, it will be difficult for her.”