Rishi Sunak launched a fresh attack on Liz Truss’s plans for tax cuts ahead of the pair’s next debate in their quest to become prime minister.
The former chancellor said his Foreign Secretary rival in the Tory leadership race would further drive up interest rates, raising mortgage payments, with her plans.
His warning came as the Bank of England was forecast to raise interest rates to the highest level in nearly three decades on Thursday, from 1.25% to 1.75%.
A Bank of England announcement is scheduled for midday, with experts warning that inflation could peak at 15%, adding to the already painful cost-of-living crisis with spiralling prices.
Meanwhile, the pair are also due to face off in a head-to-head debate on Sky News at 8pm on Thursday.
Mr Sunak has faced attacks from Ms Truss for overseeing rising taxes while in No 11 during the pandemic, as she pledges a more radical plan to slash them.
He has insisted he does want to see taxes come down, but argues it is necessary to bring inflation under control before making major changes.
The former chancellor stressed there are “crucial differences” between their plans “because timing is everything”.
“If we rush through premature tax cuts before we have gripped inflation all we are doing is giving with one hand and then taking away with the other,” he said in a statement.
“That would stoke inflation and drive up interest rates, adding to people’s mortgage payments. And it would mean every pound people get back in their pockets is nothing more than a down payment on rising prices.
“A policy prospectus devoid of hard choices might create a warm feeling in the short term, but it will be cold comfort when it lets Labour into Number 10 and consigns the Conservative Party to the wilderness of opposition.”
Ms Truss countered by saying “we cannot tax our way to growth” and insisting her plans would not drive up prices further.
“My economic plan will get our economy moving by reforming the supply side, getting EU regulation off our statute books, and cutting taxes,” she said.
“Delivering bold reforms to the supply side is the way we’ll tackle inflation in the long run and deliver sustainable growth. Modest tax cuts – including scrapping a potentially ruinous corporation tax rise that hasn’t even come into force – are not inflationary.”
Ms Truss’ campaign received another high-profile Tory endorsement as former leadership hopeful Sajid Javid threw his weight behind the Foreign Secretary.
Mr Javid, whose resignation as health secretary minutes before Mr Sunak quit as chancellor triggered the cascade that forced Boris Johnson to quit, warned that “tax cuts now are essential” as he backed Ms Truss’ plans.
In an article for The Times, Mr Javid said the nation risks “sleepwalking into a big-state, high-tax, low-growth, social democratic model which risks us becoming a middle-income economy by the 2030s”.
Thursday’s debate follows a previous head-to-head last week, held on TalkTV on July 26, which was halted after presenter Kate McCann fainted off-camera while Ms Truss was speaking.
Ms McCann later said she was feeling “a little embarrassed, a little bit bruised, but glad to be back and totally fine”.
On Wednesday, Ms Truss was boosted by two surveys giving her overwhelming leads over Mr Sunak after the pair took part in a hustings in Cardiff.
She won a 34-percentage point lead over Mr Sunak in a YouGov poll of party members, before a survey for the ConservativeHome website released on Wednesday put her 32 points ahead.
The televised event also saw her blame “the media” for having “misinterpreted” her abandoned £8.8 billion policy pledge to cut the public sector wage bill, with Mr Sunak welcoming the U-turn.
She also renewed her attacks on Scottish First Minister Nicola Sturgeon after saying she would ignore the “attention seeker” and launched a new attack on Ms Sturgeon’s Welsh counterpart.
Ms Truss described First Minister of Wales Mark Drakeford as a “low-energy version of Jeremy Corbyn”, the former Labour leader, and said his successor Sir Keir Starmer was a “plastic patriot”.