Truss said the world was facing “very, very difficult economic times” as she also insisted Kwarteng, was working “very, very closely” with the Bank of England.

Kwarteng sought to reassure investment bank executives on Wednesday the government had sound fiscal plans, in the face of a meltdown in British assets. But executives have warned the government that a planned November 23 fiscal update was too far away, and it needed to make its plans clear earlier.

The pound lost 1 per cent against the US dollar to trade just below $US1.08 on Thursday, after gaining in the wake of the central bank’s intervention.

The action taken by the central bank triggered a sharp rally in UK assets, with the 30-year gilt yield posting its steepest daily drop on record.

The long-dated debt instrument ended Wednesday with a yield of 3.94 per cent after touching a 20-year high of more than 5 per cent earlier in the session. Yields on 10-year UK debt fell to 4.01 per cent from 4.59 per cent. Yields fall as investors buy the bonds, boosting prices.

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The government’s policy, which includes removing the 45 per cent tax rate for those on incomes of more than £150,000 ($250,000) and scrapping the cap on bankers’ bonuses that were imposed by the EU after the financial crisis, have reopened wounds within Conservative ranks amid months of infighting since Boris Johnson was ousted.

Downing Street was forced to reject calls from Conservative MPs on Wednesday for Kwarteng, a close ally of Truss, to resign after the market’s response to their economic package.

Lord Clarke, a Tory former chancellor, argued on Thursday that no other Conservative government would have made a “mistake” like Kwarteng’s mini-budget.

“I still hope in two years’ time, they might look like a normal, competent, Conservative government because no Conservative government in my lifetime would ever have made a mistake of this kind,” he told Times Radio.

“Fiscal discipline or good housekeeping, as Margaret (Thatcher) always used to say, was one of the very strong cards that the government had because it was regarded as good at running the economy by the public.”

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