LONDON (AFP) - British Prime Minister Liz Terrace vowed Wednesday not to cut public spending while sticking to the tax-cutting mini-budget offered last month that caused turbulence in the British market.

Terrace, making her first appearance in parliament since September 23 when introducing the controversial plan, said she was "absolutely" committed to what she pledged during her campaign to take over the leadership of the Conservative Party by maintaining current spending.

With the currency, bond and other markets fearing additional borrowing to offset the tax cuts, fears grew that Truss would resort to cutting budgets for government departments and return to the unpopular austerity policy of a decade ago.

But Terrace insisted that would not happen. "What we're going to make sure is that debt goes down over the medium term," she told MPs during her second "Questions to the Prime Minister" session in the House of Commons. "We will not do this by cutting public spending, but by spending public money well," she added. She said her policies would "protect our economy".

Terrace has also insisted that its controversial economic package announced by Treasury Secretary Kwasi Kwarting that includes cutting many different taxes will lead to "higher growth and lower inflation".

However, the initial impact of that plan was negative on various levels, as the pound fell to unprecedented levels against the dollar, while government borrowing and mortgage interest escalated. The Bank of England was forced to make several emergency interventions in the bond markets, while the economy contracted unexpectedly in August after posting weak growth the previous month amid a cost-of-living crisis and rising energy bills.

Labor leader Keir Starmer accused Truss of being "lost in denial" and "shirking responsibility" because it refused to acknowledge the economic ramifications of its policies, instead blaming the destabilization of markets on external factors such as the war in Ukraine.

Media reports said the mini-budget - already softened with plans to scrap the higher tax rate - could see further adjustments.

But a spokesman for Trass denied this information and told reporters, "We are committed to the measures that were identified in the growth plan." He added that Truss was "confident that this is the right approach to take to ensure that low or no growth is avoided."