‘Economic illiteracy’: Senior Treasury Minister mocked for failing to understand impact of mini-Budget

A senior Treasury minister has been mocked after he claimed Friday’s Growth Plan was good for the value of the pound, as it fell to its lowest position against the dollar since 1985.

Chris Philp, the Chief Secretary to the Treasury, tweeted at 10.17am that tax cuts were good for the price of sterling.

The pound had spiked to 1.12 against the dollar, from less than 1.116 before the statement started, as markets reacted to Kwasi Kwarteng’s decision to cut the basic rate of income tax by 1p next year and abolish the additional rate for earners above £150,000 altogether.

“Great to see sterling strengthening on the back of the new UK Growth Plan,” Mr Philp said.

But minutes later the currency began to slide in a crash that continued all afternoon, falling to $1.09 by 5pm.

The position is the lowest for 37 years, making imports more expensive for the UK and its exports cheaper for other countries.

Equity markets were also particularly downbeat on Friday, with the FTSE 100 plunging to its lowest in two months.

Labour sources pointed to Mr Philp’s tweet as evidence he did not understand the economic effects of Friday’s Growth Plan.

“It’s beyond embarrassing and a real insight to the economic illiteracy that has led to the reckless gamble from the Tories today,” a party source told The Telegraph.

“It’s left them looking completely disconnected from reality.”

Economists had warned that the Chancellor’s tax-cutting ambitions could put further pressure on the pound, which has also been impacted by strength in the US dollar.

Martin Weale, former Bank of England policy maker, cautioned that the new Government’s economic plans will “end in tears” - with a run on the pound in an event similar to what was recorded in 1976.

Mr Philp has been a Treasury minister for less than a month, having previously served as a junior culture minister in Boris Johnson’s government.