Liz Truss yesterday appeared to rule out any cuts to public services despite warnings that her tax-cutting plans require over £60 billion in savings to balance the books.

During only her second Prime Minister's Questions in the Commons, she responded to Sir Keir Starmer who asked if she still would stick to her pledge that she will not do public spending reductions.

“Absolutely,” she told MPs, adding: “What we will make sure is that over the medium term the debt is falling. But we will do that not by cutting public spending but by making sure we spend public money well.”

However, it is understood that the Prime Minister was referring to the overall amount of public spending, which has increased by tens of billions due to the cost of the energy bailout.

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Further changes to departmental budgets are expected to be set out in the Chancellor’s medium term fiscal plan on Halloween, which leaves the door open to spending cuts in future years.

The Prime Minister’s official spokesman later warned “difficult decisions” would need to be made on spending when asked whether the cost of the energy package would be used as cover for departmental cuts.

Ms Truss’ comments caused surprise in the Commons, following warnings this week from the Institute for Fiscal Studies (IFS) that in order to balance the books from the energy support package and tax cuts, Ms Truss will have to impose cuts to public services at a scale not seen since austerity was introduced by George Osborne.

Given the Government will aim to convince the markets that it has a credible plan to bring down debt and borrowing, and will not cut public spending, it has raised fresh questions on whether the Prime Minister and her Prime Minister will U-turn on more of its tax-cuts that it has laid out in the mini-budget.

Chris Philp, the Chief Secretary to the Treasury, yesterday was mocked by Labour MPs as he insisted that there were no plans to perform any more U-turns when pressed by senior Tory Mel Stride.

Mr Stride, who heads up the Treasury select committee later said that there were questions whether the economic plan being worked on by the Government will be able to calm the financial turmoil that has erupted since the mini-budget.

“Given the clear government position expressed today on protecting public spending there is an emerging question,” he said.

“Whether any plan that does not now include at least some element of further row back on the tax package can actually satisfy the markets.

“Credibility might now be swinging towards evidence of a clear change in tack rather than just coming up with other measures that try to square the fiscal circle. The Chancellor will only get one opportunity to land his plans and the forecast positively.

“He must take no chances. There is too much at stake for all of us.”

Since the mini-budget, the Bank of England has been forced to intervene multiple times to prevent problems for pension funds, but yesterday Andrew Bailey, the Bank’s governor, confirmed that this intervention would end on Friday, leading to a further slump in the pound.

It came as Britain's economy unexpectedly shrank in August, fueling concerns that the UK is heading for a recession during the cost of living crisis, despite the efforts of the Chancellor and Prime Minister to drive growth.

The Office for National Statistics (ONS) said GDP dropped by 0.3 per cent between July and August, down from growth of 0.1 per cent the previous month, which was downwardly revised from the 0.2 per cent previous estimation.

Truss says no cuts or tax u-turns to balance the books