Chancellor Kwasi Kwarteng has said his mini-budget was needed to stop a collapse in consumer spending, despite it sparking days of market turmoil.
He told his party’s MPs that cutting taxes and limiting energy bills had protected the economy.
The plans, announced last Friday, led to a slump in the pound and the Bank of England stepping in to prevent the collapse of some pension funds.
Mr Kwarteng and Prime Minister Liz Truss defended their plans on Thursday.
In a series of BBC interviews, Ms Truss insisted “urgent action” was needed to boost the UK economy, adding she was “prepared to do what it takes to make that happen” and that the tax cuts outlined last week were the right plan.
This comes as a Yougov poll suggested Labour had opened up a massive 33-point lead over the Tories.
Mr Kwarteng tried to bolster support among Tory MPs by sending them a message saying he was working at pace to show markets he had a “clear plan”.
The chancellor said he understood their concern about the mini-budget, which promised £45bn of tax cuts funded by government borrowing.
Fears this would be unaffordable and drive up interest rates had sent markets into a panic, with government borrowing costs surging, and the pound hitting a record low on Monday.
The market turmoil was fuelled by the lack of an independent forecast on the impact of the plans, which had been offered by the Office for Budget Responsibility, but was declined by the government.
Mr Kwarteng insisted the market volatility was “global” and being driven by the Ukraine war, Covid, and “a super strong US dollar”.
He added that the government had needed to “act quickly”.
“However I totally understand the need to be credible with markets,” he told MPs. “We will show markets our plan is sound, credible and will work to drive growth.”
He said the government would announce reforms in “childcare, business regulations, financial services, agriculture and more” over the next six weeks.
Ms Truss also argued market turmoil was being caused by global factors in a series of interviews with BBC local radio stations.
She insisted that “currencies are under pressure around the world”.
Later, in BBC TV interviews, she said the UK was “in a very serious situation” but that was due to “the aftermath of Covid and Putin’s war in Ukraine”.
The Treasury select committee, which is led by Conservative MP Mel Stride, an ally of former leadership contender Rishi Sunak, rejected the government explanation.
In a letter to Mr Kwarteng on Thursday, Mr Stride said the government plans had “resulted in various significant and concerning reactions in the markets”.
He said a drop in the price of government bonds following the announcement of the plans was greater than “any movement during the global financial crisis or the pandemic”.
He said the financial impact of the mini-budget was larger than that of a typical Budget, but there had been no assessment by the independent Office for Budget Responsibility (OBR) to go with it, despite the OBR saying it could produce one.
“It is hard to conclude other than that an absence of a forecast has in some part driven the lack of confidence in the markets,” he said. “Some may have formed the unfortunate impression that the government may be seeking to avoid scrutiny.”
The OBR said on Thursday it had offered to provide a forecast for the mini-budget, but the chancellor had rejected that.
BBC economics editor Faisal Islam said this absence of a forecast had made the market reaction to the plans worse.
Mr Stride called on Mr Kwarteng to provide an OBR forecast “earlier” than 23 November, when the government is due to publish its medium term fiscal plan.
The OBR said on Thursday it had been asked by Mr Kwarteng to produce a first draft of its next economic forecasts by 7 October.
In an unusual move, Ms Truss will hold emergency talks with OBR head Richard Hughes on Friday, along with Mr Kwarteng.
Analysis
Zoe Conway, BBC News correspondent
In this message, the chancellor is seeking to reassure MPs that he is working quickly to come up with a plan to calm the markets.
In the face of mounting criticism from his backbenchers, he is also urging them to stay united.
On 23 November, Mr Kwarteng is due to set out his medium term fiscal plan.
He argues this will show how he intends to get debt falling but he has been coming under pressure from Conservative MPs to act more quickly.
There is scepticism among MPs that the economic growth needed to pay for the announced tax cuts and the government’s energy bills intervention can be generated quickly enough.
That’s why, in this note to Conservative MPs, he says that there are lots of ”ambitious” supply side reforms coming over the next six weeks.
The chancellor might be conciliatory in tone, saying he always values colleagues and that he is ”always available for a meeting”, but there is no hint here that he is prepared to backtrack on any aspect of his economic plan.
Speaking to reporters on Thursday, Mr Kwarteng rejected claims the government’s plans had made people worse off by contributing to a spike in UK mortgage rates.
It is the first time Mr Kwarteng has made a public comment on his mini-budget since Sunday, when he hinted there were more tax cuts to come.
Since then the plan has faced widespread criticism, with the International Monetary Fund and former Bank of England governor Mark Carney disparaging the plan.
On Wednesday, the Bank of England was forced to intervene, pledging to buy $65bn of government bonds in a bid to calm markets.
However, there are concerns the turmoil could continue and fears it might affect the housing market. A record number of mortgage products have been pulled since Friday, amid fears the Bank of England will have to raise interest rates much more sharply than previously expected.
Mr Kwarteng said the government’s plan to limit energy bills for households and businesses would save people “thousands of pounds a year”.
However, the chancellor said it was too early to say whether he would keep the previous government’s promise to increase benefits next April in line with inflation.
He did, however, say the prime minister was committed to reinstating the triple lock on pensions, which means they increase by whichever is highest: inflation, the average wage rise, or 2.5%.
Sniffer dogs in Ecuador have found 6.23 tonnes of cocaine hidden in a banana shipment, police say.
The dogs alerted their handlers, who seized 5,630 parcels filled with a white substance that later tested positive for cocaine.
The shipment was destined for Germany, officials said, and would have been worth $224m (£173m) had it reached its destination.
Five people had been arrested following the discovery, according to the prosecutor-general’s office.
Police said they had found the massive cocaine haul during a routine inspection of container stored at Posorja deepwater port south-west of Ecuador’s largest city, Guayaquil.
The cocaine parcels had been hidden beneath crates of bananas destined for export.
One of those arrested in connection to the drug discovery was a representative of the export company responsible for the shipment, whom prosecutors said had been present at the inspection and gave officials the names of the four other suspects.
They include the managers of the banana plantation where the cocaine is suspected to have been added to the fruit shipment, as well as the driver who took the container to the port.
Ecuador has become a major transit country for cocaine produced in neighbouring Peru and Colombia, with transnational criminal gangs using Ecuador’s ports to ship the drug to Europe and the US.
Last year, Ecuadorean security forces seized more than 200 tonnes of drugs, most of it cocaine. Only the US and Colombia seized more drugs in 2023.
Gangs have caused a wave of violent crime in Ecuador, leading President Daniel Noboa to declare a state of emergency and deploy tens of thousands of police officers and soldiers in an effort to combat them.
These security forces have stopped large amounts of cocaine from being shipped to Europe.
In January, officers found the largest stash ever to be seized in Ecuador – 22 tonnes of cocaine – buried in a pig farm.
However, extortion, kidnappings and murders remain high in the Andean country.
Thailand has expanded its visa-free entry scheme to 93 countries and territories as it seeks to revitalize its tourism industry.
Visitors can stay in the South-East Asian nation for up to 60 days under the new scheme that took effect on Monday,
Previously, passport holders from 57 countries were allowed to enter without a visa.
Tourism is a key pillar of the Thai economy, but it has not fully recovered from the pandemic.
Thailand recorded 17.5 million foreign tourists arrivals in the first six months of 2024, up 35% from the same period last year, according to official data. However, the numbers pale in comparison to pre-pandemic levels.
Most of the visitors were from China, Malaysia and India.
Tourism revenue during the same period came in at 858 billion baht ($23.6bn; £18.3bn), less than a quarter of the government’s target.
Millions of tourists flock to Thailand every year for its golden temples, white sand beaches, picturesque mountains and vibrant night life.
The revised visa-free rules are part of a broader plan to boost tourism.
Also on Monday, Thailand introduced a new five-year visa for remote workers, that allows holders to stay for up to 180 days each year.
The country will also allow visiting students, who earn a bachelor’s degree or higher in Thailand, to stay for one year after graduation to find a job or travel.
In June, authorities announced an extension of a waiver on hoteliers’ operating fees for two more years. They also scrapped a proposed tourism fee for visitors flying into the country.
However some stakeholders are concerned that the country’s infrastructure may not be able to keep up with travellers’ demands.
“If more people are coming, it means the country as a whole… has to prepare our resources to welcome them,” said Kantapong Thananuangroj, president of the Thai Tourism Promotion Association.
“If not, [the tourists] may not be impressed with the experience they have in Thailand and we may not get a second chance,” he said.
Chamnan Srisawat, president of the Tourism Council of Thailand, said he foresees a “bottleneck in air traffic as the incoming flights may not increase in time to catch up with the demands of the travellers”.
Some people have also raised safety concerns after rumours that tourists have been kidnapped and sent across the border to work in scam centres in Myanmar or Cambodia.
The prospective new owner of Royal Mail has said he will not walk away from the requirement to deliver letters throughout the UK six days a week, as long as he is running the service.
“As long as I’m alive, I completely exclude this,” Czech billionaire Daniel Kretinsky told the BBC.
Mr Kretinsky has had a £3.6bn offer for Royal Mail accepted by its board.
Shareholders are expected to approve the deal in the coming months, but the government also has a say over whether it goes ahead.
Currently the Universal Service Obligation (USO) requires Royal Mail to deliver letters six days a week throughout the country for the same price. But questions have been raised over whether the service could be reduced in the future.
In an exclusive interview with the BBC, Mr Kretinsky also said he would be willing to share profits with employees, if given the go-ahead to buy the group.
However, he appeared to reject the idea of employees having a stake in Royal Mail, which unions have called for in exchange for their support.
The Royal Mail board agreed a £3.6bn takeover offer from Mr Kretinsky in May for the 500-year-old organisation, which employs more than 150,000 people. Including assumed debts, the offer is worth £5bn.
But because Royal Mail is a nationally important company, the government has the power to scrutinise and potentially block the deal.
As well as keeping the new government on side, Mr Kretinsky also faces the task of convincing postal unions that the proposed deal will benefit employees.
The USO is a potential sticking point for both the government and unions.
Royal Mail is required by law to deliver letters six days a week and parcels five days a week to every address in the UK for a fixed price.
How well this has actually been working in practice is a different matter. Ten years ago, 92% of first class post arrived on time. By the end of last year it was down to 74%, according to the regulator Ofcom.
Last year the regulator fined Royal Mail £5.6m for failing to meet its delivery targets.
Royal Mail has been pushing for this obligation to be watered down. It wants to cut second class letter deliveries to every other weekday, saying this will save £300m, and lead to “fewer than 1,000” voluntary redundancies.
‘Unconditional commitment’
Mr Kretinsky has committed in writing to honouring the USO, but only for five years.
And after that, in theory, the new owners could just walk away from it.
However, Mr Kretinsky told the BBC: “As long as I’m alive, I completely exclude this, and I’m sure that anybody that would be my successor would absolutely understand this.
“I say this as an absolutely clear, unconditional commitment: Royal Mail is going to be the provider of Universal Service Obligation in the UK, I would say forever, as long as the service is going to be needed, and as long as we are going to be around.”
Mr Kretinsky added that the written five-year commitment was “the longest commitment that has ever been offered in a situation like this”.
Another potential stumbling block for the deal, however, is how the company will be structured.
Unions would like to see the company renationalised, but Dave Ward, general secretary of the Communication Workers Union (CWU), told the BBC that would be “difficult in the current political and economic environment”.
Instead, what the CWU is pushing for is “a different model of ownership” – that is, where the employees part-own the business.
To get its support for the takeover, the union wants employees to share ownership of the company, along with other concessions including board representation for workers.
It says profit sharing is “not going to be enough to deliver our support and the support of the workforce”.
If the union doesn’t get what it wants, it won’t rule out industrial action, Mr Ward said. Its members went on strike in 2022 and 2023.
Although Mr Kretinsky said he is “very open” to profit sharing, he is not in favour of shared ownership.
“I don’t think the ownership stake is the right model,” he said. “The logic is: share of profit, yes, [but an] ownership structure creates a lot of complexity.
“For instance, what happens if the employee leaves? He has shares, he is leaving, he is not working for the company, he [still] needs remunerating.”
Mr Kretinsky said he didn’t want to create “some anonymous structure” but instead “remunerate the people who are working for the company, and creating value for the company”.
The union is also concerned about job losses and changes to the terms and conditions of postal workers’ contracts.
Mr Kretinsky has guaranteed no compulsory redundancies or changes in terms and conditions but only until 2025.
“If we are more successful, and we have more parcels to be delivered, we need not less people, but we need more people,” he said. “So really, job cuts are not part of our plan at all.”
He said if the management, union and employees work together, “we will be successful”.
Another concern is the potential break-up of the business.
The profit for Royal Mail’s parent company last year was entirely generated by its German and Canadian logistics and parcels business, GLS. Royal Mail itself made a loss.
Mr Kretinsky has promised not to split off GLS or load the parentcompany with excessive debt, although borrowings will rise if the deal goes through.
But he has a way to go to convince the CWU.
“I can’t think of any other country in the world that would just just hand over its entire postal service to an overseas equity investor,” Mr Ward of the CWU said.
However, Mr Kretinsky said that the postal unions “do understand that we are on the same ship, and that we need this ship to be successful, and that if we are there, we don’t have any real problems to deal with, because the sky is blue, and it’s blue for everybody.”
The union cannot stop this deal but the government can block it under the National Security and Investment Act.
Business Secretary Jonathan Reynolds has said he will scrutinise the assurances and guarantees given and called on Mr Kretinsky to work constructively with the unions.
Mr Kretinsky may say that he and the unions are ultimately on the same ship but, as things stand, they are not on the same page.
Who is Daniel Kretinsky?
Daniel Kretinsky started his career as a lawyer in his hometown of Brno, before moving to Prague.
He then made serious money in Central and Eastern European energy interests.
This includes Eustream, which transports Russian gas via pipelines that run through Ukraine, the Czech Republic and Slovakia.
He then diversified into other investments, including an almost 10% stake in UK supermarket chain Sainsbury’s and a 27% share in Premier League club West Ham United.
The Czech businessman is worth about £6bn, according to reports.