Labour urges investigation into ‘leak’ of mini-Budget after hedge funds shorted the Pound

Britain’s City regulator was urged on Monday by Labour to investigate whether leaks of the mini-Budget allowed hedge fund managers to make huge profits by shorting the Pound.

Shadow City minister Tulip Siddiq called for the probe by the Financial Conduct Authority amid reports that some hedge fund bosses had made “small fortunes” by betting that Sterling would fall after Chancellor’s Kwasi Kwarteng’s radical fiscal statement on Friday.

It also appeared that his plan to cut the 45p rate of Income Tax had leaked in advance of his mini-Budget.

One highly-respected economist said he had “got wind of” the abolition of this top rate of tax a couple of days before it was announced.

However, his revelation raised questions over whether this apparent leak, or others, may have reached the City before Friday.

Ms Siddiq told The Standard “The Financial Conduct Authority should investigate any potential wrongdoing, to determine whether it is possible that any leaks or information provided by this Conservative Government to their wealthy friends contributed to the collapse of the Pound.

“A weaker Pound means that imports such as food and energy will become even more expensive, at time when inflation and the cost-of-living crisis is already spiralling out of control.”

She spoke out after a report in The Sunday Times of a dinner about a week before the mini-Budget of hedge fund managers, who allegedly backed the Government, and were shorting the Pound, with a number of them said to have made a “small fortunes” betting against Sterling.

The Pound on Monday slumped to its lowest level against the Dollar since decimalisation in 1971, after the Chancellor hinted more tax cuts would follow those he announced last week.

Sterling fell by more than four per cent to just 1.0327 Dollars in early Asia trade before it regained some ground to about 1.06 dollars early on Monday, when the Euro also hit a fresh 20-year low amid recession and energy security fears.

Kwasi Kwarteng has previously brushed off questions about the markets’ reaction to his mini-budget - which outlined the biggest programme of tax cuts for 50 years - after it was announced on Friday using more than £70 billion of increased borrowing.

Mr Kwarteng on Sunday claimed the cuts “favour people right across the income scale” amid accusations they mainly help the rich.

He and Prime Minister Liz Truss have defended the package, despite analysis suggesting the measures will see only the incomes of the wealthiest households grow while most people will be worse off.