British property sales are collapsing and banks are cutting valuations by tens of thousands of pounds after the mortgage market descended into chaos. Lenders are reneging on offers and agreements in principle as interest rates soar,meaning buyers who were on the cusp of getting a mortgage have been forced to pull out of sales or reduce their offers,estate agents and mortgage brokers have warned.

Truss stood by her decision to cut tax for those earning more than £150,000 a year and scrapping a limit on bankers bonuses,saying she “wouldn’t apologise” for wanting a successful financial services sector.

She said the government would also introduce targeted cuts to public spending in the coming months,saying:“we are constantly looking at how to get value for money for the taxpayer ... we are always looking at how we make government more efficient.”

The pound clawed back some of its recent losses on Thursday (UK time),rising above $US1.10 against the greenback for the first time since it was sent into a nosedive last Friday. Sterling was up 1.5 per cent to $US1.1076,as relative calm returned to UK markets following the central bank’s announcement of bond purchases on Wednesday.

The 30-year gilt yield,which moves inversely to price,was trading at 3.961 per cent,trimming an earlier gain that took it to 4 per cent. A gilt is British pound denominated government debtissued by the British treasury.

Truss insisted Chancellor of the Exchequer Kwasi Kwarteng,a close political ally,was working “very,very closely” with the Bank of England. Kwarteng,who is facing calls from some of his colleagues to resign,has also refused to bow to pressure over his widely criticised tax-cutting plans in the face of a meltdown in British assets.

“We are sticking to the growth plan and we are going to help people with energy bills,” Kwarteng told the PA news agency. Those are “my two top priorities”.

Kwarteng promised he was “working at pace to align our spending policy to show the markets there is a clear plan”.

“We need to remember the cost of not acting would have been higher,” he said.

But the crisis has sparked a fresh round of infighting within bitterly divided Conservative ranks amid months of infighting since Boris Johnson was ousted from the top job.

Labour has surged to a 33-point poll lead over the Conservatives in a new YouGov poll forThe Times,with support having fallen by seven points in the past four days amid fears the government’s plans will lead to spiralling interest rate rises.

It is thought to be the largest poll lead enjoyed by any party with any pollster since the late 1990s.

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 toldTimes 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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