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Tag: Chancellor Kwasi Kwarteng

  • Liz Truss allegedly attempted to recruit friends to the UK House of Lords

    Liz Truss allegedly attempted to recruit friends to the UK House of Lords

    Liz Truss has come under fire for allegedly recommending four close friends for peerages as part of her resignation honours in an effort to reward failure.

    The 49 days Ms. Truss spent in Downing Street made her the prime minister with the shortest tenure in British political history. She left No. 10 after her September mini-budget measures helped drive the pound’s value down.

    Yet, she has continued to nominate former aides and allies for a place in the House of Lords as part of the honours a prime minister might suggest after their retirement despite being humiliated.

    Her four nominations equals roughly one peerage for every ten days she was in office, and both Labour and Lib Dem MPs have called on her successor Rishi Sunak to block the nominations.

    Ruth Porter, former special adviser to Britain's newly appointed Prime Minister Liz Truss waits outside 10 Downing Street for the arrival of the new Prime Minister in central London, on September 6, 2022. - Liz Truss on Tuesday officially became Britain's new prime minister, at an audience with head of state Queen Elizabeth II after the resignation of Boris Johnson. The former foreign secretary, 47, was seen in an official photograph shaking hands with the monarch to accept her offer to form a new government and become the 15th prime minister of her 70-year reign. (Photo by ISABEL INFANTES / AFP) (Photo by ISABEL INFANTES/AFP via Getty Images)
    Ruth Porter headed Ms Truss’s leadership campaig and was briefly her deputy chief of staff (Picture: Getty)
    Matthew Elliott - Chief Executive, Taxpayers Alliance ....
    Matthew Elliott was a Brexit campigner who headed the Vote Leave campaign

    Deputy Labour leader Angela Rayner called it a ‘list of shame’, coming after she said Ms Truss ‘and her Conservative co-conspirators’ had taken a ‘wrecking ball to the economy’.

    According to The Sun and the i newspapers, former Vote Leave chief executive Matthew Elliott, Conservative Party donor Jon Moynihan, long-term aide Ruth Porter and think tank boss Mark Littlewood have all allegedly been recommended for peerages by the former Tory leader.

    Mr Littlewood is director of the free market-supporting think tank Institute of Economic Affairs (IEA).

    The group backed the disastrous mini-budget unveiled by Ms Truss and her chancellor Kwasi Kwarteng, with Mr Littlewood, according to The Guardian, calling it a ‘boost-up budget’.

    Upon her resignation, Mr Littlewood said: ‘I’m very sorry the PM’s efforts to move the UK in a pro-growth, low-tax, pro-enterprise direction has failed.

    ‘She had a difficult hand to play, but she also played the hand badly.’

    He also served as chief press spokesman for the Lib Dems and reportedly was at Oxford University with Ms Truss.

    Mark Littlewood, Director General at the Institute of Economic Affairs
    Mark Littlewood is director of a conservative think tank and attended Oxford University with Liz Truss
    Mandatory Credit: Photo by REX (9693298e) Prince Charles with Jon Moynihan OBE. 'Platinum' Israel 70th Independence Celebrations, Royal Albert Hall, London, UK - 24 May 2018
    Jon Moynihan (R) is a Tory donor who gave £50,000 to Ms Truss’s leadership campaign

    Ms Porter currently works for a lobbying firm but helped spearhead Ms Truss’s successful Tory leadership bid in the summer before briefly serving as her deputy chief of staff in No 10.

    The register of MPs’ financial interests shows that Mr Moynihan donated, in two separate transactions, more than £50,000 to Ms Truss’s leadership campaign.

    Mr Elliott, as well as campaigning for Brexit, was also involved in founding the Taxpayers’ Alliance group which lobbies for lower taxes.

    Ms Rayner said: ‘Liz Truss and her Conservative co-conspirators took a wrecking ball to the economy in a disastrous six-week premiership that has left millions facing mortgage misery, but Rishi Sunak now looks set to allow her to hand out these obscene rewards for failure.

    ‘If this Prime Minister was serious about the integrity he promised, he would be point blank refusing to rubber stamp Liz Truss’s list of shame.

    ‘Instead of approving undeserved honours and lifetime golden goodbyes for her cheerleaders, he should be demanding the public apology she has refused to provide.’

    Wendy Chamberlain MP, the Lib Dems’ chief whip, said: ‘Handing out more expensive gongs to Conservative allies is a truly remarkable way to reward the shortest tenure as prime minister in British political history.

    Labour deputy Angela Rayner labelled the nominations a ‘list of shame’ (Picture: Getty)

    ‘Truss and her Conservative colleagues trashed our economy and left millions in misery.

    ‘Those selected for honours are the very people who helped plunge the country into chaos and crisis.

    ‘Rishi Sunak must block these honours immediately as allowing Truss to dish out positions of influence shows a stunning lack of humility.’

    A spokesman for Ms Truss said he could not comment on who any individuals on the nomination list were.

  • Former British-Ghanaian UK finance minister Kwarteng admits to having been ‘carried away’

    Kwasi Kwarteng, the former Chancellor of the Exchequer of the United Kingdom, has acknowledged that he “got carried away” while holding the position.

    The former minister of finance admitted as much to the Financial Times, as reported by the BBC, and claimed that he was “too impatient” with the mini-budget when he and his boss, the former prime minister Liz Truss, unveiled the huge package of disastrous cuts.

    “There was a chance, but the decision-makers, including me, blew it.
    People, including myself, became irrational “said he.

    It would be recalled the British-Ghanaian politician’s plan sparked turmoil in the markets, a situation that eventually led to his resignation, same as Truss’.

    As Chancellor, Kwasi Kwarteng set out a package to abolish the top rate of income tax for the highest earners, axe the cap on bankers’ bonuses, and provide an expensive and long-running energy support package.

    The plans would have required more than £70bn of increased borrowing, but most of the measures were torn up by his successor, Jeremy Hunt, the BBC reported.

    In the end, the politician became the first finance minister of the UK to stay the shortest in office, having only served 38 days.

  • Market forecasts for the Bank of England rate are at their lowest since the mini-budget

    Market estimates for the Bank of England’s bank rate are at their lowest since the mini-budget, which is excellent news for individuals with mortgages.

    Market forecasts peaked soon after the mini-budget at 6.1%, but have since dropped to just over 5%.

    It was just three weeks ago the then-Chancellor Kwasi Kwarteng unveiled his tax-cutting mini-budget to MPs, which caused economic turmoil in the UK, as the value of the pound plummeted.

    Today, Mr Hunt said there “were mistakes” in last month’s announcement, and pointed out some taxes may have to rise and others might not fall as much as planned.

    The BoE is due to announce its next decision on interest rates, which will impact household mortgages, on 3 November and many investors think it will either raise them from their current level of 2.25% to 3% or possibly 3.25%, both of which would be much bigger moves than usual.

     

  • ‘Changing the chancellor will not get the PM off the hook’ – MPs react to sacking

    Labour and Lib Dem MPs are weighing in with their opinions on the recent sacking of Kwasi Kwarteng as chancellor.

    Jeremy Hunt was announced as his replacement shortly after.

    MP for Wolverhampton South East Pat McFadden says changing the chancellor “will not get the PM off the hook” and that she is a 100% co-owner of the mini-budget”, while others call for a general election.

    Source: Skynews 

     

  • ‘Changing the chancellor doesn’t undo the damage that’s been done’ – Reeves

    Labour MP Rachel Reeves has spoken out since the news that Kwasi Kwarteng has been sacked by Liz Truss as chancellor. 

    Ms Reeves says that the country doesn’t just need a change in chancellor, “we need a change in government”.

    Source:Skynews

     

  • Tax U-turn tax might steady markets but would be politically damaging

    Nothing is inevitable in politics, but if the markets are expecting a U-turn and there isn’t one, then the situation could get worse both politically and economically for the prime minister.

    I don’t think we’re going to see a complete unpicking of the mini-budget from last month but, as we’ve been hearing, one of the possible U-turns would be over corporation tax.

    Rishi Sunak wanted to put corporation tax up from 19% to 25% from next year, and it was a central plank of Liz Truss’s campaign during the summer to become Conservative leader to ditch that tax rise.

    There is speculation she will put it up a little bit – perhaps not the full amount that Sunak was suggesting. If there is a U-turn at all, certainly that may help steady nerves in the market but politically it could be very damaging.

    There are now questions about who will be in charge of economic policy. Is it Chancellor Kwasi Kwarteng, who is returning early from the IMF meeting in Washington, or is it No 10?

    The decisions to be taken on the economy – and the reaction to them – could determine whether Truss’s policies and her premiership, can survive until the next election.

    DISCLAIMER: Independentghana.com will not be liable for any inaccuracies contained in this article. The views expressed in the article are solely those of the author and do not reflect those of The Independent Ghana

    Source: BBC.com

     

     

  • Jacob Rees-Mogg criticised over mini-budget claims

     

    Jacob Rees-Mogg’s claims recent economic turmoil is not linked to the mini-budget have been criticised.

    The business secretary said market volatility could be due to the Bank of England’s failure to raise interest rates in line with the US.

    “It’s much more to do with interest rates than it is do with a minor part of fiscal policy,” he told the BBC.

    Economists and some MPs said huge tax cut plans without explaining the economic impact had worried investors.

    After the mini-budget, the pound plunged and government borrowing costs surged.

    “What has caused the effect in pension funds… is not necessarily the mini-budget. It could just as easily be the fact that the day before the Bank of England did not raise interest rates as much as the (US) Federal Reserve did,” he said.

    “Jumping to conclusions about causality is not meeting the BBC’s requirement for impartiality” he said, after a suggestion the chancellor’s actions had been the trigger for the fluctuations in the value of the pound and government bonds.

    Bond yields rose sharply after the BoE rate decision on Thursday and further during the mini-budget

    At the first PMQs since the mini-budget, Labour leader Sir Keir Starmer accused Prime Minister Liz Truss of “ducking the question” when asked whether she agreed with the business secretary.

    Ms Truss said the government had taken “decisive action”, adding “as a result of our action… we will see higher growth and lower inflation.”

    ‘Straw that broke camel’s back’

     

    Deutsche Bank’s chief UK economist Sanjay Raja told MPs the mini-budget on 23 September was the “straw that broke the camel’s back”.

    He said the “trade shock” because of Brexit is a factor, and added: “You throw on the 23 September event, you’ve got a side-lined financial watchdog, you’ve got lack of a medium-term fiscal plan, one of the largest unfunded tax cuts we’ve seen since the early 1970s, it was kind of the straw that broke the camel’s back.”

    The Resolution Foundation’s Torsten Bell said it was clear the huge package of cuts, which was downgraded to £43bn after Mr Kwarteng’s U-turn on the top rate of income tax, should not have happened in the current financial climate.

    He also said the sacking of the Treasury’s top civil servant Sir Tom Scholar had contributed.

    “Yes, firing Treasury civil servants isn’t a good idea, that hasn’t helped, side-lining your fiscal watchdog hasn’t helped,” he told the MPs.

    Kwasi KwartengGetty Images

    Experts believe Mr Kwarteng will have to row back on more of his tax cuts or drastically cut public spending.

    He added that after Chancellor Kwasi Kwarteng announced a plan that “dumped fiscal orthodoxy”, then vowed to bring forward further tax cuts, it was “no surprise to any of us that this is where you end up”.

    “This is what happens if you aren’t paying attention,” he said. “It was always going to be hard but it was exactly because it was always going to be hard that you don’t do this.”

    Head of Multi Asset at Royal London Asset Management, Trevor Greetham, told the BBC that the risk of a recession has increased because of the market turmoil, which he said he believed was linked to the mini-budget.

    “There is frustration that hard-won credibility for the UK market has been lost,” he added.

    “And if you read some of the commentary from overseas, it is pretty damning at the moment.”

    Professor Jagjit Chadha, director of National Institute of Economic and Social Research (Niesr) agreed that the market turmoil was a result of the “undermining” of the “cooperative arrangement” between UK’s leading financial institutions.

    Should governments announce major tax cuts again without consulting the UK’s top financial bodies, Professor Chadha warned that a “succession of higher interest rates and higher deficits” would result.

    Professor Chadha told the Commons Treasury Committee that the “real danger” seen after the mini-budget was “obviously on the back of what can only be described as guerrilla tactics against our independent economic institutions over the summer – the Treasury, the Bank of England and the Office for Budget Responsibility”.

    Gerard Lyons, an economist who advised Liz Truss and Kwasi Kwarteng during the leadership contest, speaking on the BBC’s World at One programme admitted that the mini-budget “misread” the country’s financial situation.

    However, he argued that everything that has happened was not “solely due to the mini-budget” but also down to parts of the financial system that were vulnerable to interest rates going up.

    The Bank of England has warned interest rates could rise again after the value of the pound plummeted, following the government’s decision to cut taxes and borrow more.

    After the market turmoil, it stepped in with an emergency bond-buying intervention designed to stabilise the economy but said this scheme would end on Friday.

    Prime Minister Liz Truss has said the promised tax cuts will boost UK economic growth and therefore help pay for themselves.

    The chancellor has also committed to publishing an independent forecast of the UK’s economic prospects by the OBR, the independent budget watchdog, at the same time as his economic plan – something he declined to do with his mini-budget.

    Meanwhile, the UK economy unexpectedly shrank by 0.3% in August, according to new figures from the Office for National Statistics.

    Source: Ghanaweb

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  • Bank of England’s warning pension help to end worries investors

    After the Bank of England reiterated that its emergency bond-buying program will end this week and denied rumours that it would be prolonged, investors remained uneasy.

    As stated earlier, the assistance would stop on Friday, according to the statement.

    In order to keep bond prices stable and avoid a sale that may jeopardize some pension plans, the Bank is purchasing bonds.

    Following the statement, bond sales increased and borrowing costs nearly reached their peak from when the Bank initially intervened to quell market turbulence following the mini-budget.

    Chancellor Kwasi Kwarteng’s plans for huge tax cuts without a clear indication of how they would be paid for sparked a dramatic reaction on financial markets last month. The pound fell to a record low and bond prices also fell sharply forcing the Bank of England to step in to stop their price falling further.

    The government raises money it needs for spending by selling bonds – a form of debt that is paid back plus interest in anywhere between five and 30 years.

    Pension funds invest in bonds because they provide a low but usually reliable return over a long period of time.

    However, the sharp fall in their value after the mini-budget forced pension funds to sell bonds, threatening to create a “downward spiral” in their prices as more were offloaded, which left some funds close to collapse.

    On Tuesday evening Andrew Bailey told pension funds: “You’ve got three days left now and you’ve got to sort it out.”

    The pound initially fell sharply against the dollar before steadying, after Mr Bailey’s surprisingly blunt statement, which dashed hopes the support could be extended.

    Mr Bailey told the BBC he had stayed up all night to try and find a way to calm markets and said the Bank was doing everything it could to preserve financial stability, but said it had always been clear that the help would be temporary.

    He said it was now down to financial firms to arrange their affairs, saying pension funds had “an important task” to ensure they are resilient.

    “I’m afraid this has to be done, for the sake of financial stability,” he said.

     

    Members of the Bank’s Financial Policy Committee (FPC), which helps to protect UK financial stability, said on Wednesday that the governor was crystal clear the bond-buying programme would end, although other support measures would remain in place.

    The recent turmoil has already fed through to the mortgage market, where hundreds of products have been suspended as the volatility has made it difficult for lenders to know how to price these long-term loans.

    The Bank’s FPC said that this was likely to put households under severe pressure next year.

    ‘Uncharted territory’

     

    Earlier, pensions industry body the Pensions and Lifetime Savings Association had warned against the help ending “too soon”.

    It suggested the support should be extended until 31 October, when chancellor Kwasi Kwarteng is due to detail his economic plan explaining how he will balance the public finances. The statement will be accompanied by independent forecasts on the prospects for the UK economy.

    The government has said it remains confident in its tax cuts plan, with Mr Kwarteng telling MPs he was “relentlessly focused on growing the economy” and “raising living standards”.

    But Mr Bailey’s words further increases the pressure on the government, and the chancellor, to come up with an economically credible and politically viable debt plan, and quickly.

    Labour’s shadow chancellor Rachel Reeves said: “This is a Tory crisis that has been made in Downing Street, and that is being paid for by working people.”

    Former IMF deputy director Mohamed El-Erian told BBC News that the economy was on “shaky ground”.

    He said financial systems going into turmoil “can cause a lot of damage”.

    In its latest World Economic Outlook report on Tuesday, the IMF acknowledged the mini-budget would “lift growth somewhat in the near term”, although it would “complicate the fight” against the cost-of-living crisis.

     

    More on this story

     

  • Mini-budget: Pensions faced being wound up after economy turmoil

    Pensions faced being wound up due to the turmoil in the markets following the mini-budget, the deputy governor of the Bank of England has said.

    Sir Jon Cunliffe was writing in response to a letter from the chair of the Treasury Select Committee, Mel Stride.

    In it, Sir John noted that the “first concerns” about the state of the economy came after the “growth plan” announced by Chancellor Kwasi Kwarteng on 23 September.

    Sir John added that the following week, the Bank got news of “increasing severity” from the markets – including some types of pension funds that lend the government money and get paid back over decades.

    On Tuesday night, the Bank was told by managers that some pension funds risked falling into “negative net asset values” – and may begin “the process of winding up” on Wednesday 28 September.

    This would have had a knock-on effect and threatened “severe disruption of core funding markets and consequent widespread financial instability”, the deputy governor said.

    Bank of England employees worked overnight to come up with a plan to buy some government debt to stabilise the market.

    So far, £3.7bn worth of debt has been purchased by the Bank.

  • Kwarteng will meet with high street bank executives despite the mortgage market’s freeze

    In response to worries about how the current market upheaval would affect the provision of home loans, the chancellor will meet with executives from lenders on Thursday, including Barclays and NatWest, Sky News has learned.

    Executives from Britain’s biggest high street banks have been summoned for talks with Kwasi Kwarteng amid concerns about the impact of recent financial turmoil on the mortgage market.

    Sky News has learned that the Treasury has convened a meeting on Thursday at which the chancellor is expected to quiz lenders on their plans.

    City sources said executives from Barclays, Lloyds Banking Group, and NatWest Group were among those expected to attend.

    Hundreds of mortgage deals have been pulled or frozen by banks as a result of volatility in how banks price home loans.

    The chief executive of the City watchdog told The Sunday Times at the weekend that he wanted lenders to justify the withdrawal of fixed-rate mortgage products.

    “If a product is withdrawn for a temporary period, we want to understand when they’re going to come back to the market so that those people who may need to refinance are able to proceed with their plans,” Nikhil Rathi told the newspaper.

    eople briefed on the agenda for Thursday’s meeting with Mr Kwarteng said it would also address the economic growth plans announced since he was appointed as chancellor last month.

    Mr Kwarteng has already held a series of meetings with senior financiers, including executives from investment banks, asset managers, and insurers.

    He has said he will set out plans for a deregulatory drive dubbed Big Bang 2.0 in the coming weeks, with a particular focus on scrapping rules imposed during Britain’s membership of the EU.

    None of the banks invited to the meeting would comment on Wednesday.

  • Kwasi Kwarteng’s U-turn won’t be forgotten

    A fortnight ago at the top of the Empire State Building in New York, the prime minister told me she was willing to do things that were unpopular.

    That is a theory she very efficiently tested to destruction.

    Her party’s poll ratings plunged as deep as that Manhattan skyscraper is tall following her government’s announcement of a tax-cutting package.

    The markets were spooked, Conservative MPs were spooked more.

    This policy was destined to crowd out everything else here at Tory conference in Birmingham for a simple reason.

    Tory MPs from ministers down said it was unsellable: offering the best paid a tax cut with the prospect of public spending and benefits cuts at the same time.

    That is why a policy that just 10 days ago was presented as a triumph for the new Chancellor, a moment of political theatrics, a moment leant into and revelled in, has now sunk to the bottom of the canal here in Birmingham; junked, binned, gone.

    This leaves the new Chancellor Kwasi Kwarteng – and by extension the prime minister – downcast and humiliated, wounded and weakened.

    “Can I have a black coffee?” he asked, on arrival for an appointment with Nick Robinson at 0810 on the BBC’s Today programme.

    If ever there was a moment for this chancellor to request that beverage, this was that moment.

    Twenty minutes later, as he climbed out of his chair, the look of relief on his face was obvious.

    He had, by the end of the interview at least, acknowledged “we got this wrong”.

    He had also said – about the broader package of measures in his statement – “we reset the debate”.

    They had, but not in quite the way they had anticipated.

    That debate, within the Conservative Party and beyond, was whether the new government knew what it was doing.

    Whether the new government was in control of events.

    On that last point, they weren’t.

    Liz Truss will now hope this U-turn creates space to move forward, hauling herself out of the political quagmire of a budgetary statement that imploded on contact with political reality.

    This is another defining moment for a young government not yet a month old.

    And one that won’t be forgotten.

    Source: BBC

  • Tory conference: Labour favourites to win power at next election, says John Curtice

    The Labour Party are “very clearly the favourites” to form the next government, pollster Sir John Curtice has told Tory activists in Birmingham.

    New PM Liz Truss was now as unpopular with voters as Boris Johnson was when he was ousted, said Sir John.

    And even if Labour’s current double digit poll lead reduced before the next election in 2024, Labour were still likely to gain power, he suggested.

    His analysis was greeted with dismay and cries of “wow” from activists.

    The veteran pollster, who masterminds general election exit polls, said Labour already had a nine point lead in the polls when Ms Truss won last month’s Tory leadership election and she had not enjoyed a honeymoon period.

    Chancellor Kwasi Kwarteng’s tax-cutting mini-budget just over a week ago – and the market reaction to it – had produced a 7% swing to Labour, he said.

    “The truth is, whatever the merits of Liz Truss’s package, it has resulted in very serious electoral damage to the Conservatives as an institution and to this new leader,” he told the Demos fringe meeting.

    The swing to Labour was similar in size to that seen on Black Wednesday in 1992, the first time the policies of a Conservative government had produced turmoil on the money markets.

    If voters remembered the events of the past week when they go to the polls in two years’ time, Labour could be on course for a three figure majority, said Sir John, even if Ms Truss’s policies work as intended and produce economic growth.

    In the event of a hung Parliament, opposition parties would be unlikely to prop up a minority Tory administration, he suggested, which made Labour clear favourites to gain power.

    Tory activists received a similarly sobering message at an earlier fringe meeting, from pollster with links to the party.

    Veteran US pollster Frank Luntz told them: “If you want to win, stop bitching, stop griping, stop complaining and get [it] together.”

    He said the party’s MPs had to start communicating with voters in a language they understood, and talking about things which mattered to them.

    He also took aim at defeated Tory leadership contender and former chancellor Rishi Sunak, who has opted to stay away from this week’s conference.

    “Where is Rishi Sunak? Why is he not here?” he asked the audience of Tory members.

    If Mr Sunak was here he could “start to unify the party, you guys can go forward together,” added Mr Luntz.

    “When people don’t even show up, what are the voters supposed to think?”

    Frank LuntzGetty Images
    Frank Luntz is a friend of ex PM Boris Johnson and a longstanding Tory observer

    In a scathing assessment of Liz Truss’s first weeks in power, Rachel Wolf, who co-wrote the Conservatives’ 2019 election manifesto, said the new prime minister had no mandate from voters or her own MPs for the “ambitious” Thatcherite agenda she was pursuing.

    She accused Ms Truss of “appearing not to care” about the impact her policies will have on voters worried about the cost of living,

    “People are feeling poorer,” she added, and they don’t think the solutions Liz Truss has come up with “make any sense”.

    Ms Wolf, co-founder of polling company Public First, and a former adviser to Michael Gove, picked apart Ms Truss’s claim to be a strong leader in the mould of Margaret Thatcher, and not afraid of unpopular policies.

    The crucial difference between the two, she argued, was that Lady Thatcher had an electoral and Parliamentary mandate for her policies and was capable of articulating them in way that resonated with ordinary voters.

    “Thatcher was always a strong leader,” she told the meeting, “but she was of the people, she spoke in their language”.

    Pursuing an “ambitious Thatcherite agenda” without a mandate was a recipe for disaster at the polls, she suggested, and she hoped Conservative MPs could at least start to demonstrate some unity and competence.

    She also had a message for Sir Keir Starmer.

    “People are voting against the government but they are not voting for Labour, That might quite possibly be enough but it is the thing I would be most worried about if I were him.

    “The thing that always comes up with Starmer, and still does, is that he has no views, no ideas of his own.”

    Asked about the qualities needed in a modern leader, she said: “It’s very hard to support a leader who is uninterested in, or despises, you.

    “It’s not whether they are strong, whether they have a view of their own, if they fundamentally don’t seem to like their electorate very much, or don’t think they are worth considering it’s very hard to vote for them.”

  • Ground should have been laid for tax cuts, admits Liz Truss

    Liz Truss has admitted she should have “laid the ground better” for her mini-budget, after it sparked days of market turmoil.

    The prime minister told the BBC’s Laura Kuenssberg she had “learned from that”, but she was confident her tax cutting package would boost economic growth.

    She added a decision to cut the top earner tax rate was a “decision that the chancellor made”.

    And she revealed it was not discussed with the whole cabinet beforehand.

    The cut to the 45p rate has provoked outrage from opposition parties, and concern from some Conservative MPs.

    Former minister Michael Gove said the cut displayed the “wrong values,” and signalled he wouldn’t vote for it.

    He also said he was “profoundly concerned” about the decision to borrow to fund the tax cuts, calling it “not Conservative”.

    The government’s mini-budget included £45bn in cuts funded by government borrowing, and revealed the government expects its two-year scheme to fix energy prices will cost £60bn in the first six months.

    The announcements sparked days of turbulence in financial markets, with the pound falling to a record low against the US dollar on Monday, although it has since recovered.

    The rocky economic backdrop is set to dominate this week’s Conservative party conference, Ms Truss’s first as Tory leader, where she faces the task of reassuring her MPs over her approach to boosting the flagging UK economy.

    Speaking from the gathering in Birmingham, Ms Truss promised to win over “the hearts and minds” of Tory MPs to persuade them of her plan.

    In an interview for the BBC’s Sunday With Laura Kuenssberg, she said she remained committed to her approach and she was “confident” better growth would result.

    Michael Gove: Cutting tax for the wealthiest “a display of the wrong values”

    “I do stand by the package we announced and I stand by the fact we announced it quickly, because we had to act,” the prime minister added.

    “But I do accept we should have laid the ground better. I have learned from that, and I will make sure that in future we do a better job of laying the ground.”

    She also defended the decision to cut the 45p income tax rate for top earners, saying it “raises very little” and made the tax system more complicated.

    She added that the cut was a decision made by Chancellor Kwasi Kwarteng – prompting former cabinet minister and Boris Johnson loyalist Nadine Dorries to accuse her of throwing him “under a bus”.

    And Mr Gove, who has served in several cabinet roles in previous governments, expressed concerns about scrapping the top rate at a time when “people are suffering”.

    Former deputy prime minister Damian Green warned a reception at conference that the Tories would lose the next general election if “we end up painting ourselves as the party of the rich”.

    Labour’s shadow chancellor Rachel Reeves accused the government of conducting a “mad experiment” with the economy, calling the market turmoil a “crisis made in Downing Street”.

    Also speaking to Laura Kuenssberg, she said investors had been spooked by the “sheer scale of the borrowing” to fund the tax cuts, alongside the decision not to publish an official economic forecast alongside the plans.

    She added that the public would “pay the price” for the turbulence, and said Ms Truss had failed to understand the “anxiety and fear” about the state of the economy.

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    Analysis box by Chris Mason, political editor

    Just a few weeks ago, this was a conference where many would have anticipated a mood of loyal celebration.

    Yes, a government and a country confronting difficult times – but a party welcoming a new prime minister; relieved to have left the arguments of the collapsing premiership of Boris Johnson behind.

    Instead, with nosediving opinion poll numbers and self-inflicted economic volatility, the mood here is bleak, the outbreaks of public anger illustrative of a deeper well of private anguish.

    There are few things more dangerous for a government than a perception that senior figures don’t know what they are doing and are not fully in control of events.

    Some Tory MPs are already privately questioning how long Liz Truss might last in office; even more say they will not support elements of her budget, not least the tax cut for the highest paid.

    Senior Conservatives recognise this is a moment of considerable jeopardy for a prime minister not yet a month in the job – and the next few days will be crucial in providing reassurance for the party and the country.

    2px presentational grey line
    Rachel Reeves says the government is conducting a “mad experiment” with the UK economy

    In a bid to reassure markets, the government has said it will set out how it plans to lower public debt in the medium term on 23 November.

    Pushed repeatedly on whether she planned to cut public spending, Ms Truss did not say, but added she wanted to get “value for money for the taxpayer”.

    She did not commit to raising benefits in line with inflation, saying that a decision would be made later this autumn.

    She also rejected calls to bring forward an assessment of the government’s plans from the UK’s budget watchdog, currently due to be published alongside the debt plan.

    She added that an assessment of the spending plans was “not yet ready”.

    “There’s no point in publishing something that’s not ready. That would just cause confusion,” she added.

    Source: BBC

  • Mortgage lenders pull deals due to interest rate rise fears

    Some mortgage deals have been withdrawn by banks and building societies after a fall in the pound fuelled forecasts of a sharp rise in interest rates.

    Virgin Money and Skipton Building Society halted mortgage offers for new customers while Bank of Ireland said it had withdrawn all mortgages.

    Halifax said it would stop mortgages with product fees.

    The Bank of England said on Monday it would “not hesitate” to hike interest rates after the pound hit record lows.

    The pound plunged against the dollar on Monday after comments at the weekend from Chancellor Kwasi Kwarteng pledging more tax cuts, on top of Friday’s mini-budget when he announced the biggest tax cuts for 50 years. Overnight, the pound stabilised at $1.08 after hitting a record low of $1.03 on Monday.

    The mini-budget plans will require a large increase in government borrowing and concerns among investors about the country’s ability to meet that debt led to the value of the pound being pushed down while the cost of UK government borrowing also soared.

    Former US Treasury Secretary Larry Summers tweeted: “I was very pessimistic about the consequences of utterly irresponsible UK policy on Friday. But, I did not expect markets to get so bad so fast.”

    A weaker pound also makes imports and goods priced in dollars, such as oil, much more costly and risks fuelling price rises at a time when UK inflation is at its highest for 40 years.

    The Bank of England said it would make a full assessment as to whether it should change interest rates at its next meeting on 3 November, following speculation it might have intervened earlier.

    Following Monday’s volatility, financial markets updated predictions and said interest rates could now more than double by next April to 5.8%, from their current level of 2.25%, to curb inflation – the rate at which prices for consumers rise. Interest rates had previously been forecast to hit 4% by next May.

    Experts said a rise in the cost of long-term borrowing meant the current cost to mortgage lenders of offering new deals was now more expensive. There are also concerns that would-be borrowers will rush to secure mortgages at favourable rates before interest rates rise and if they do jump, homeowners will not be able to afford higher repayments.

    Some 8.3 million people have mortgages in the UK, according to UK Finance, the trade association.

    The number of residential mortgages on offer by lenders fell to 3,596 on Tuesday, according to financial information firm Moneyfacts, compared with 3,961 deals on Friday when the mini-budget was announced. It is also a sharp fall from the number available in December last year when the Bank of England started raising interest rates.

    Julie-Ann Haines, chief executive at Principality Building Society, said: “As a lender what we need to do is one of two things. Firstly to make sure that customer mortgages are affordable. We have to do that under regulation and we therefore need to stress-test and make sure that if the Bank of England base rates go up that consumers can still afford their mortgage.

    “And of course the second thing is banks and building societies have to be able to make a margin and so they have to price that increased financial market view of the interest rates into their products, and that’s why you’re seeing [mortgage] rates start to really go up quite fast over the past two to three months.”

    The Bank has already lifted interest rates seven times in a row since December to the highest rate in 14 years.

    In August, the Bank scrapped a mortgage affordability rule which required banks and building societies to stress test whether homeowners could cope with a 3% rise in interest rates.

    Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said if interest rates rise as predicted, the average household refinancing a two-year fixed rate mortgage in the first half of next year would see monthly payments jump to £1,490 from £863.

    “Many simply won’t be able to afford this,” he said.

    Pound v dollar graphic

    Virgin Money confirmed a decision to halt deals for new customers was due to the market conditions.

    Both Virgin and Skipton Building Society said submitted applications would still be processed. The lenders also said they would issue a new range of mortgage deals in the coming weeks.

    Bank of Ireland said it had “withdrawn all residential and buy to let rates” on Monday, adding that it “will launch new ranges as soon as possible”.

    Halifax said from Wednesday it would remove mortgage products that come with a fee “as a result of significant changes in mortgage market pricing we’ve seen over recent weeks”.

    Mortgage deals which have product fees can result in lower monthly repayments for homeowners, with the fee being added to the total mortgage debt.

    But although mortgage rates may be lower per month, the overall cost of the loan will be higher due to more interest accruing over time.

    Halifax said it had not changed its mortgage rates and it continued to offer product fee-free options for borrowers.

    HSBC said it had no plans to change mortgage offers, while NatWest said its rates were under “continual review in line with market conditions”. Nationwide said it had not withdrawn any mortgage deals and will “continue to keep the market under review”.

    TSB declined to comment.

    The statement from the Bank of England came shortly after a separate statement by the Treasury, seemingly intended to reassure investors, laying out a timetable for when more details of the government’s plans would be given.

    It said cabinet ministers would announce measures to boost growth over the coming weeks and that the chancellor would set out a “medium-term fiscal plan”, including measures to reduce the national debt, on 23 November.

    It also said the plan would come with a forecast of expected UK growth and government borrowing from the independent Office for Budget Responsibility, the omission of which from Friday’s mini-budget had drawn criticism.

    pledging more tax cuts, on top of Friday’s mini-budget when he announced the biggest tax cuts for 50 years. Overnight, the pound stabilised at $1.08 after hitting a record low of $1.03 on Monday.

    The mini-budget plans will require a large increase in government borrowing and concerns among investors about the country’s ability to meet that debt led to the value of the pound being pushed down while the cost of UK government borrowing also soared.

    Former US Treasury Secretary Larry Summers tweeted: “I was very pessimistic about the consequences of utterly irresponsible UK policy on Friday. But, I did not expect markets to get so bad so fast.”

    A weaker pound also makes imports and goods priced in dollars, such as oil, much more costly and risks fuelling price rises at a time when UK inflation is at its highest for 40 years.

    The Bank of England said it would make a full assessment as to whether it should change interest rates at its next meeting on 3 November, following speculation it might have intervened earlier.

    Following Monday’s volatility, financial markets updated predictions and said interest rates could now more than double by next April to 5.8%, from their current level of 2.25%, to curb inflation – the rate at which prices for consumers rise. Interest rates had previously been forecast to hit 4% by next May.

    Experts said a rise in the cost of long-term borrowing meant the current cost to mortgage lenders of offering new deals was now more expensive. There are also concerns that would-be borrowers will rush to secure mortgages at favourable rates before interest rates rise and if they do jump, homeowners will not be able to afford higher repayments.

    Some 8.3 million people have mortgages in the UK, according to UK Finance, the trade association.

    The number of residential mortgages on offer by lenders fell to 3,596 on Tuesday, according to financial information firm Moneyfacts, compared with 3,961 deals on Friday when the mini-budget was announced. It is also a sharp fall from the number available in December last year when the Bank of England started raising interest rates.

    Julie-Ann Haines, chief executive at Principality Building Society, said: “As a lender what we need to do is one of two things. Firstly to make sure that customer mortgages are affordable. We have to do that under regulation and we therefore need to stress-test and make sure that if the Bank of England base rates go up that consumers can still afford their mortgage.

    “And of course the second thing is banks and building societies have to be able to make a margin and so they have to price that increased financial market view of the interest rates into their products, and that’s why you’re seeing [mortgage] rates start to really go up quite fast over the past two to three months.”

    The Bank has already lifted interest rates seven times in a row since December to the highest rate in 14 years.

    In August, the Bank scrapped a mortgage affordability rule which required banks and building societies to stress test whether homeowners could cope with a 3% rise in interest rates.

    Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said if interest rates rise as predicted, the average household refinancing a two-year fixed rate mortgage in the first half of next year would see monthly payments jump to £1,490 from £863.

    “Many simply won’t be able to afford this,” he said.

    Pound v dollar graphic

    Virgin Money confirmed a decision to halt deals for new customers was due to the market conditions.

    Both Virgin and Skipton Building Society said submitted applications would still be processed. The lenders also said they would issue a new range of mortgage deals in the coming weeks.

    Bank of Ireland said it had “withdrawn all residential and buy to let rates” on Monday, adding that it “will launch new ranges as soon as possible”.

    Halifax said from Wednesday it would remove mortgage products that come with a fee “as a result of significant changes in mortgage market pricing we’ve seen over recent weeks”.

    Mortgage deals which have product fees can result in lower monthly repayments for homeowners, with the fee being added to the total mortgage debt.

    But although mortgage rates may be lower per month, the overall cost of the loan will be higher due to more interest accruing over time.

    Halifax said it had not changed its mortgage rates and it continued to offer product fee-free options for borrowers.

    HSBC said it had no plans to change mortgage offers, while NatWest said its rates were under “continual review in line with market conditions”. Nationwide said it had not withdrawn any mortgage deals and will “continue to keep the market under review”.

    TSB declined to comment.

    The statement from the Bank of England came shortly after a separate statement by the Treasury, seemingly intended to reassure investors, laying out a timetable for when more details of the government’s plans would be given.

    It said cabinet ministers would announce measures to boost growth over the coming weeks and that the chancellor would set out a “medium-term fiscal plan”, including measures to reduce the national debt, on 23 November.

    It also said the plan would come with a forecast of expected UK growth and government borrowing from the independent Office for Budget Responsibility, the omission of which from Friday’s mini-budget had drawn criticism.

    Source: BBC

  • Bank will ‘not hesitate’ to raise interest rates after pound’s fall

    The Bank of England has said it will “not hesitate” to hike interest rates to curb inflation after the pound fell to a record low against the US dollar.

    The Bank said it was “monitoring developments closely” and would make a decision on any action in November.

    Its statement came after the Treasury said it would publish a plan to tackle debt in a bid to reassure investors.

    In Asia currency market trade on Tuesday, the pound rose by more than 1% to top $1.08.

    On Monday, some UK lenders said that they were halting new mortgage deals.

    Halifax, the UK’s largest mortgage lender, said it would temporarily withdraw all mortgage products that come with a fee due to the market volatility.

    Virgin Money and Skipton Building Society have also stopped offering mortgage products to new customers.

    Experts said a rise in the cost of long-term borrowing due to the market turmoil meant the cost to lenders of offering new mortgage deals was too expensive.

    Sterling fell to an all-time low earlier against the US dollar after Chancellor Kwasi Kwarteng pledged further tax cuts at the weekend on top of Friday’s mini-budget where he announced the biggest tax cuts in 50 years.

    The pound had been sliding as global markets reacted to the sharp increase in government borrowing required to fund the cuts.

    A weak pound makes it more expensive to buy imported goods and risks pushing up the rising cost of living even further. Imports of commodities priced in dollars, including oil and gas, are also more expensive.

    UK inflation, the rate at which prices rise, is already rising at its fastest rate for 40 years.

    Some economists had predicted the Bank of England would call an emergency meeting in the coming days to raise interest rates in a bid to stem the fall, as well as calming rising prices.

    But the Bank of England instead said it was “monitoring developments in financial markets very closely” and would make a full assessment at its next meeting on 3 November.

    Investors are now predicting that interest rates could more than double by next spring to 5.8% from their current 2.25%, to curb high inflation, which is expected to be fuelled by the huge tax cuts announced in Friday’s mini-budget.

    ‘Not affordable’

    Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said if interest rates rise as predicted, the average household refinancing a two-year fixed rate mortgage in the first half of next year would see monthly payments jump to £1,490 from £863.

    “Many simply won’t be able to afford this,” he said.

    Source: BBC

  • Pound hits record low after tax cut plans

    As a result of the markets’ response to the UK’s largest tax cuts in 50 years, the pound has reached a record low against the dollar.

    Sterling dropped nearly to $1.03 in early Asian trade before reclaiming some ground to reach roughly $1.06 on Monday morning, UK time.

    In anticipation of a rise in borrowing, Chancellor Kwasi Kwarteng has promised additional tax cuts on top of the £45 billion plan he announced on Friday.

    The rise of the dollar has put pressure on the pound as well.

    The euro also touched a fresh 20-year-low against the dollar in morning Asia trade amid investor concerns about the risk of recession as winter approaches with no sign of an end to the energy crisis or the war in Ukraine.

    If the pound stays at this low level against the dollar, imports of commodities priced in dollars, including oil and gas, will be more costly.

    Other goods from the US could also be considerably more expensive and British tourists visiting America will find that their holiday money does not go as far as before sterling’s slide.

    There are also concerns that the tax cuts and a surge in government borrowing will stoke high inflation and force the Bank of England to raise interest rates even further. This would raise monthly mortgage costs for millions of homeowners.

    Last week, the Bank raised interest rates by half a percentage point to 2.25% to try to calm inflation which is at a 40-year high of 9.9%. The rate increase was the seventh in a row and took rates to the highest for 14 years.

    However, some economists have speculated that the Bank may call an emergency meeting as soon as this week to hike interest rates again ahead.

    On Friday, Chancellor Kwasi Kwarteng Chancellor Kwasi Kwarteng pledges to end ‘cycle of stagnation’ in mini-budgetannounced a massive shake-up of UK taxes during a “mini-budget” to boost economic growth.

    Under the plans, which he hailed a “new era” for the economy, income tax and the stamp duty on home purchases will be cut and planned rises in corporation taxes have been scrapped.

    Mr Kwarteng said a major change of direction was needed to kick-start the UK economy.

    But Labour said it would not solve the cost-of-living crisis and was a “plan to reward the already wealthy”. Former shadow chancellor John McDonnell told the BBC’s Today programme: “Internationally people have lost confidence in this government. The mini-budget came as a shock to everyone.”

    Why the falling pound matters

    Investors all around the world trade huge amounts of foreign currency every day. The rate at which investors swap currencies also determines what rate people get at the bank, post office or foreign exchanges.

    Many people don’t think about exchange rates until it’s time to swap money for a foreign holiday. When you travel abroad, things will be more expensive if the pound buys less of the local currency.

    However, a fall in the pound affects household finances too.

    If the pound is worth less, the cost of importing goods from overseas goes up.

    For example, as oil is priced in dollars a weak pound can make filling up your car with petrol more expensive. Gas is also priced in dollars.

    Technology goods, like iPhones, that are made abroad, may get more expensive in UK shops. Even things that are made in the UK but from parts that are bought abroad can get much more expensive.

    Speaking to the BBC on Sunday, Mr Kwarteng said he wants to keep cutting taxes.

    Peter Escho, co-founder of investment firm Wealthi, said: “All currencies are getting sold off against the US dollar, so there is a large element of US dollar strength.”

    Trading volumes in Asia have also been low which can make movements in currency trading appear more pronounced.

    But Mr Escho said: “But with the pound, it has really been exacerbated by news that the new government will be cutting taxes, which is inflationary.

    “Add to that recent energy subsidies and news that the Bank of England might need to have an emergency rate-hike meeting, this all results in a sense of panic,” he added.

    Some investors think the Bank of England will be forced to take emergency action to halt the pound’s slide.

    “To stop the bleeding even temporarily, the Bank of England may well enter ‘whatever it takes’ territory to bring inflation down. An emergency meeting rate hike could happen as soon as this week to regain credibility in the market. We could even see a hike today,” Stephen Innes, managing partner at SPI Asset Management told the BBC.

  • Chancellor Kwasi Kwarteng delivers his mini-budget statement to MPs, here’s the key points

    Mr Kwarteng began his remarks by telling the Commons that energy costs were taking a big toll: “People need to know that help is coming”.

    • Household bills to be cut by an expected £1,400 this year with aid from energy price guarantee and £400 grant.

    Millions of the most vulnerable households will receive additional payments, taking their total savings this year to £2,200.

    • Total cost of energy package, including business support, over next six months estimated at £60bn. It is “entirely appropriate for the government to use our borrowing powers to fund temporary measures to support families and businesses”.

    • Bank of England independence is “sacrosanct”.

    • Government to set out its fiscal approach more fully in future and the Office for Budget Responsibility will publish an economic and fiscal forecast before the end of the year.
    • Will legislate to require trade unions to put pay offers to a member vote so strikes can only be called once negotiations have fully broken down.
    • To cut taxes for businesses in designated tax sites for 10 years to support investment, jobs and growth.
    • The cap on bankers’ bonuses is to be lifted as part of efforts to “reaffirm” the UK’s status as a financial services hub.
    Source:skynews.com