Pound – live: Calls for Truss to ‘come out of hiding’ to fix ‘economic disaster’

Liz Truss has been accused of hiding away while her tax giveaway mini-Budget caused economic turmoil.

On Wednesday, the Bank of England was forced to intervene to prevent a crisis in the UK’s major pension funds.

The bank’s decision to buy government bonds - or gilts - was an attempt to calm markets reeling from the government’s mini-Budget last week.

There has been no sign of Ms Truss, who was last seen in public sitting on the green Commons benches alongside her chancellor for his statement.

Former cabinet minister David Davis said: “This was her manifesto for the leadership, so she has to come out and defend it in a forthright way.”

Lib Dem leader Sir Ed Davey called on the PM to break cover, warning that she had just “24 hours to fix this economic disaster and prevent people losing their homes”.

The government has denied causing the sterling crisis, instead pointing the finger at Russia’s war in Ukraine, which it said was playing havoc with all major economies.

Key points

• Calls grow for Liz Truss to come out of 'hiding'

• Bank of England makes emergency intervention to calm markets

• International Monetary Fund issues rare warning to Kwasi Kwarteng and Liz Truss

• Government blames Russia’s war in Ukraine for market turmoil

• Treasury defends tax cuts, says aimed at protecting households amid rising energy costs

UK economic strategy is ‘cautionary tale’, says top Joe Biden official

10:59 , Andy Gregory

The UK government’s radical economic strategy is a “cautionary tale”, said a senior member of Joe Biden’s cabinet in scathing remarks about prime minister Liz Truss’s plan.

Asked if she would look at the turmoil in Britain as a cautionary tale, the US commerce secretary Gina Raimondo said: “Yes … these policies are brand new. From where I sit, I don’t know how this story’s going to end. I would just simply say, we’re pursuing a different strategy.”

Ms Raimondo continued: “You say, ‘Is it a cautionary tale?’ I mean, the markets have plummeted. The pound has plummeted. It’s early going for that new strategy, but it’s not the one we are pursuing.”

Our political correspondent Adam Forrest has the full report:

UK economic strategy is ‘cautionary tale’, says top Joe Biden official

Labour urges Kwarteng to ‘reconsider’ mini-Budget

10:38 , Andy Gregory

Shadow treasury chief secretary Pat McFadden has repeated Labour’s call for Kwasi Kwarteng to “reconsider” his mini-Budget and save millions of people’s mortgages rather than “save face”.

“This was a reckless act of choice which has wreaked havoc in financial markets. We had the extraordinary intervention by the Bank of England to stop major pension funds going off a cliff,” Mr McFadden told BBC News.

“It is really important now that we try to get some stability back into those markets and in the longer term restore the economic credibility of the country. What is more important here? The chancellor and the prime minister saving face or saving the mortgage payments of millions of people across the country?

“This is going to have a real and damaging impact where payments could go up hundreds or thousands of pounds a year. They have got to reconsider this.”

FTSE 100 drops 2% and pound falters as Liz Truss speaks

10:36 , Andy Gregory

The FTSE 100 index lost 2 per cent of its value as Liz Truss spoke to regional radio stations this morning.

However, it began to recover as the hour came to a close, and is currently down 1.06 per cent on the previous day’s close.

The pound also fell in value during the prime minister’s interview round, falling from $1.0814 at 8am to $1.0775 an hour later. By 10am, it had risen slightly to $1.0795 but remained below its previous position.

Gilt yields spike as Liz Truss gives interviews

10:30 , Andy Gregory

Gilt yields – the interest rates on UK government bonds – spiked as Liz Truss conducted her regional radio interview round this morning, eating into some of the fall bought by the Bank of England’s intervention yesterday.

The yield on 30-year gilts, those being bought up by the bank, rose by as much as 0.15 per cent at the middle of the hour, before falling back to hover at around 4 per cent.

10-year gilt yields also rose during her comments, and currently sit 0.14 percentage points above the previous close.

Fracking could go ahead despite opposition from local councils, Liz Truss reveals

10:08 , Andy Gregory

Pressed on the issue of fracking earlier, Liz Truss suggested that the controversial gas extraction process could go ahead in Lancashire – despite opposition from the local county council and most members of parliament there.

The prime minister – whose first act in office was to lift the moratorium – told BBC Radio Lancashire she would not rule out drilling in the county, having previously stressed repeatedly that “local consent” will be required.

Our policy correspondent Jon Stone has the full report here:

Fracking could go ahead despite opposition from local councils, Liz Truss reveals

‘It’s about getting Britain moving’: Liz Truss defends tax cuts

10:01 , Andy Gregory

On BBC Radio Tees, Liz Truss was told about a listener, Diane, who has had to sell her house of 25 years due to the cost of living crisis.

Asked how tax cuts for the wealthiest would help people like Diane, the PM replied: “We are cutting taxes across the board because we were facing the highest tax burden on Britain for 70 years and that was causing a lack of economic growth, and without growth we don’t get the investment, we don’t get the jobs we need, which helps local communities right around the country.

“We’re also reversing the increase in national insurance. We’re also reducing the basic rate. So we’re reducing taxes across the board, because the tax burden was too high.”

Ms Truss was also asked about child poverty in the north east of England, which has increased during the past 12 years of Conservative government in Westminster. She replied: “Well, the number one thing we need to do to help deal with the issues that families face is to help more people get into work and create those high-paid jobs and that is exactly what our mini-Budget is about.

“It’s about getting Britain moving. It’s about getting the infrastructure built. And it’s about attracting investment around our country, including into the North East.”

Truss suggests Putin to blame for UK’s current economic crisis

09:43 , Andy Gregory

Liz Truss has suggested Vladimir Putin’s invasion of Ukraine was to blame for the current economic turmoil in the UK.

Challenged that the market turmoil was down to the mini-Budget, she told BBC Radio Bristol: “This is about Putin and the war in Ukraine – that is why we are facing such high energy prices … It is very difficult in stormy times in the international markets.”

Claiming energy bill support was the bulk of the mini-Budget, she added: “What this is about is about curbing inflation. This is a global problem – and I think it would be helpful if you looked at the situation in other countries as well.”

Pressed on BBC Radio Stoke about mortgage payments going up because of her borrowing-fuelled tax cuts, Ms Truss said: “We need to borrow more this winter for the energy crisis we are facing.

Again pointing to “global problems”, she added: “Interest rates are a matter for the Bank of England. The fact is interest rates are rising around the world.”

Watch: Truss asked ‘where have you been?’

09:40 , Andy Gregory

Appearing on regional radio programmes this morning, Liz Truss was immediately faced with questions over her silence for the past four days while her mini-Budget caused economic turmoil.

Truss in ‘complete denial’, say Lib Dems – calling for Tory conference to be cancelled

09:33 , Andy Gregory

Our political correspondent Adam Forrest reports:

Liz Truss is in “complete denial about the damage caused by her reckless and out of touch budget”, said Liberal Democrats’ deputy leader Daisy Cooper.

Lib Dem leader Ed Davey called on the prime minister to cancel the Conservative party conference this weekend, and instead recall parliament to vote to fix the “botched” mini-budget

Liz Truss insists she ‘believes in sound money'

09:21 , Andy Gregory

Liz Truss has insisted she still believes in “sound money” after her chancellor’s £45bn package of tax cuts plunged financial markets into turmoil.

The prime minister told BBC Radio Bristol: “I do believe in sound money. I would point out that interest rates are going up around the world. The Federal Reserve has raised interest rates. This is a global phenomenon.”

Pressed on whether people's pensions were safe, Ms Truss said: “The Bank of England do that and they do a very good job of it.”

Pound down 1% again after largest leap since mid-June in wake of Bank of England intervention

09:13 , Andy Gregory

Sterling and the euro fell this morning and the US dollar clawed back a recent dip as relief at the Bank of England’s intervention in bond markets faded.

The British currency leapt the most since mid-June on Wednesday after the bank announced its emergency intervention to shore up the gilt market.

But in the face of nagging doubts about Britain’s economic management and the outlook for global growth, sterling was 1 per cent lower at $1.0775 at 9am – compared to $1.0830 at the previous close – while the euro also weakened 1 per cent to $0.9642, and the dollar regained its footing.

Additional reporting by Reuters

Truss admits tax cuts have ‘disproportionate effect'

09:08 , Andy Gregory

Liz Truss has admitted that there is a “disproportionate effect” to the tax cuts her chancellor has announced, as she failed to directly say there was evidence that cutting the taxes of the wealthiest reduced inequality.

Asked how she was creating a fairer tax system, Ms Truss told BBC Radio Nottingham: “The reality is, people having lower taxes across the board, which is what we’re doing – everything from national insurance to corporation tax to income tax – helps everybody because it helps grow the economy.

“And for too long, the debate in this country has been about distribution, rather than how we grow our economy ... It’s not necessarily popular to keep corporation tax low but it’s important we do because I want to make sure we attract investment into this country.”

The prime minister admitted: “We’ve reduced those taxes across the board, and of course people who are better off tend to pay more taxes, so there’s a disproportionate effect there.”

Asked if there was any evidence that cutting the taxes of the most wealthy cut inequality, she said: “There’s plenty of evidence that if you have very high taxes they lead to lower economic growth.”

Truss says ‘not true’ her mini-Budget is ‘reverse Robin Hood'

08:49 , Andy Gregory

Liz Truss has insisted that it “simply isn’t true” that she and her chancellor have engineered a “reverse Robin Hood” mini-Budget which benefits the wealthiest disproportionately.

Asked “which bit of it?”, Ms Truss stumbled for a moment before saying: “The entirety of what you’ve just said”, before adding that “the biggest part of the package we have announced is the support on energy bills”.

Truss told Bank of England ‘are putting out your fire'

08:43 , Andy Gregory

Liz Truss has been faced with comments from listeners on BBC Radio Kent, who asked questions including: “what on Earth were you thinking?”, “how can we ever trust the Conservatives with our economy again”, and “are you ashamed of what you’ve done?”

Asked “are you [ashamed]?” by presenter Anna Cookson, the prime minister repeated her previous remarks that she had “taken action” to protect people from energy bills of up to £6,000.

But pressed that her support was “cancelled out” by the inflation and fears over mortgages and pensions sparked by her mini-Budget, Ms Truss said: “This will curb inflation by up to 5 per cent ... the action we’re taking on energy is expected to curb inflation by up to 5 per cent and we’re also taking action to grow the economy because we were facing an economic slowdown ... because of Putin’s appalling war in Ukraine.”

Put to her that “this doesn’t normally happen” for the Bank of England to make an emergency intervention as it did yesterday, Ms Truss continued: “We’re working very closely with the Bank of England.”

But Ms Cookson responded: “They’re putting out your fire, to be fair.”

The prime minister replied: “We have seen difficult markets around the world because of the very difficult international situation we face. And what our government has done is we’ve taken decisive action, first of all on energy bills ...”

Told that it is the “other decisive action that people are worried about”, Ms Truss insisted that the government “has done the right thing by taking action urgently to deal with inflation, to deal with the economic slowdown, and to deal with the high energy bills, and of course that involves taking difficult decisions.”

Kwarteng working ‘very, very closely’ with Bank of England, says Truss

08:29 , Andy Gregory

Chancellor Kwasi Kwarteng is working “very, very closely” with the governor of the Bank of England, Liz Truss has said.

“We are facing very difficult economic times. We are facing that on a global level,” the prime minister told BBC Radio Leeds. “Of course lots of measures we have announced won’t happen overnight. We won’t see growth come through overnight.

“What is important is that we are putting this country on a better trajectory for the long term.”

Mini-Budget is ‘right plan’, Liz Truss insists

08:25 , Andy Gregory

Liz Truss has insisted that her chancellor’s mini-Budget is “the right plan” and has “put this country on a better trajectory for the long-term”, but admitted that higher growth “will not come overnight”.

“As prime minister I have to do what I believe is right for the country and what is going to help move our country forward,” Ms Truss told BBC Radio Norfolk.

“Of course there are many people with many different opinions. But what I think nobody is arguing with is that we had to take action to deal with what is a very, very difficult economic situation.”

Our political editor Andrew Woodcock reports:

Liz Truss claims budget is the ‘right plan’ putting country on ‘better trajectory’

‘I’m here today’: Liz Truss asked ‘where have you been?'

08:12 , Andy Gregory

Liz Truss initially dodged the question of where she had been for the past four days as markets roiled, pointing instead to her measures to support people with energy bills.

Asked “where have you been?”, Liz Truss told BBC Radio Leeds: “I think we’ve got to remember the situation we were facing this winter ... where people could have had to pay energy bills of up to £6,000, where inflation was increasing, and where we were looking at an economic slowdown which would have had a huge impact right across the country, including in places like Leeds.

“So we had to take decisive action, and that’s why we took action to make sure people aren’t paying a typical fuel bill of more than £2,500.”

Pressed again where she has been for the last four days, Ms Truss said: “Well I’m here today on Radio Leeds talking to you”, to which presenter Rima Ahmed shot back: “Brilliant, I’m so glad that you are.”

Truss asked if she ‘slept well’ after breaking six-day silence

08:07 , Andy Gregory

Liz Truss is speaking with BBC Radio Leeds in the first of several regional radio appearances this morning, breaking nearly a week’s of silence.

Presenter Rima Ahmed began by asking her: “How are you doing, have you slept well?”

To which, the prime minister responded: “I have, thank you very much, and it’s great to be here on Radio Leeds.”

Truss and Kwarteng have ‘fixed energy crisis’, claims minister

07:59 , Adam Forrest

Treasury minister Chris Philp has insisted that the government would not reverse course and refused to apologise for the market turmoil.

“I’m not going to get into this post-facto raking over,” he told Sky News on Thursday morning. “I am certainly not going to apologise for having an energy intervention which is protecting every single household in this country.”

Mr Philp also claimed Kwasi Kwarteng and Liz Truss “have fixed this energy crisis for families”, referring to the recent £2,500 cap on annual household energy bills.

The minister also confirmed government departments will have to stick to existing spending limits – despite rising inflation – and be asked to make efficiency savings.

“The efficiency and prioritisation exercise is designed to firstly make absolutely sure we stick to those spending limits and secondly make sure that we are prioritising expenditure, not on anything that is wasteful, but on things that really deliver frontline public services and drive economic growth.”

Truss advisor says Kwarteng failed to prepare markets

07:57 , Andy Gregory

Our political correspondent Adam Forrest reports:

Gerard Lyons, the right-wing economic advisor to Liz Truss’s campaign, has criticised Mr Kwarteng for failing to prepare the markets about his planned tax measures.

“Ahead of the mini-budget, it was necessary for the chancellor to keep financial markets on-side – and I warned about the need for him to do this,” he told BBC Newsnight. “One key group he failed to keep on-side was the financial markets.”

Andrew Sentence, former member of the Bank of England’s monetary policy committee, said Mr Kwarteng had failed to prepare the bank properly for the budget measures.

The chancellor “should have had them in his back pocket” before making his announcement last Friday, Mr Sentence told BBC Radio 4’s Today programme.

Pound slips again in Asia trading after rallying due to Bank of England intervention

07:55 , Andy Gregory

The pound fell again this morning after briefly bouncing back, as markets remained cautious of the Bank of England’s emergency measures to stem economic turmoil.

“The BoE’s bond purchases may temper the UK government’s borrowing costs but have not resolved the tensions between fiscal loosening and monetary tightening,” Carol Kong, a strategist at Commonwealth Bank of Australia, said responding to the latest plunge of the pound.

“Concerns about the UK’s fiscal plan and its broader economy suggest sterling will likely stay offered against the dollar and other major currencies in the near term.”

My colleague Shweta Sharma has the details:

Pound slips again in Asia trading after rallying due to Bank of England intervention

Chaos stalks mortgage market

07:45 , Sravasti Dasgupta

The real horror for the Tory party lies in the housing market.

So far, more than 350 mortgage products have been withdrawn from the market.

They will return, so that buyers can obtain the loans they need, but they will be an awful lot more expensive. The market is expecting UK interest rates to rise sharply and it has moved in anticipation of that.Zoopla, which releases its regular house price index on Thursday morning, thinks potential purchasers’ buying power could be slashed by as much as 28 per cent if mortgage rates reach 5 per cent by the end of the year, which isn’t an unreasonable assumption, assuming buyers want to keep their monthly repayments unchanged.

Chief Business Commentator James Moore writes:

Chaos stalks mortgage market after disastrous mini-Budget

Government ‘undercutting economic institutions’, former Bank of England governor says

07:37 , Andy Gregory

A former Bank of England governor has accused the government of “undercutting economic institutions”, warning that chancellor Kwasi Kwarteng’s mini-budget – the largest tax giveaway in five decades at a time of inflation – had led to “dramatic” shifts in financial markets.

Sir Mark Carney warned that the government’s £45bn tax giveaway was “working at some cross-purposes” with the bank, which was forced to make an emergency intervention in the gilt market on Wednesday amid reported fears of mass insolvencies in UK pension funds which are heavily reliant on the government bonds.

“Unfortunately having a partial budget, in these circumstances – tough global economy, tough financial market position, working at cross-purposes with the Bank – has led to quite dramatic moves in financial markets,” Sir Mark told BBC Radio 4’s Today programme.

Referring to the absence of an OBR forecast in Mr Kwarteng’s mini-budget, Mr Carney – who led the bank for seven years until March 2020 – said: “I don't understand why it seems unusual that you actually want to know the numbers in a budget, after all that is what a budget is, and understand the forecasts underpinning those numbers.

“And then make your own judgements about whether those are plausible. It's important to have it open to independent and dare I say expert scrutiny. That's the system that's been put in place.”

Amid economic crisis, Truss' first appearance today in regional radio interviews

07:10 , Andy Gregory

Liz Truss is set to appear in public for the first time since her government’s mini-Budget was presented last week.

Ms Truss is scheduled to have interview slots on BBC Radio Leeds, BBC Radio Tees, BBC Radio Nottingham, BBC Radio Lancashire and BBC Radio Bristol between 8am and 9am.

The interviews come as the prime minister faces criticism for going into hiding amid the economic crisis.

Tory former cabinet minister David Davis had warned that “this was her manifesto for the leadership, so she has to come out and defend it in a forthright way”, while Lib Dem leader Sir Ed Davey warned the PM had just “24 hours to fix this economic disaster and prevent people losing their homes”.

Our chief political commentator John Rentoul had written: “We haven’t heard from Truss since she spoke in the graveyard slot at the United Nations, overnight, a week ago. She was in the House of Commons by Kwasi Kwarteng’s side as he announced his emergency Budget on Friday, supportively nodding and smiling, but she scuttled out of the chamber as soon as the leader of the opposition had responded.”

You can read his analysis here:

Where is Liz Truss? Our prime minister has gone missing | John Rentoul

Kwarteng’s tax cuts will add less than 0.1% to GDP, study warns

06:50 , Sravasti Dasgupta

Kwasi Kwarteng’s huge tax cuts will add less than 0.1 per cent to GDP each year, a new analysis is warning – while costing £82bn in debt interest alone over five years.

The package, £45bn of unfunded tax cuts mainly for top earners and big business, will generate only £6bn in extra receipts, the report says – “leaving a yawning fiscal deficit”.

Rob Merrick has the details:

Kwarteng’ tax-slashing bonanza will add less than 0.1% to GDP, study warns

Councils warn support services could be axed for poorest

06:20 , Sravasti Dasgupta

The District Councils’ Network (DCN), which represents 186 lower-tier councils outside England’s big cities and urban areas, has warned that support services for families hit hardest by the cost-of-living crisis face being axed.

The DCN said without government help inflationary pressures and rising demand for services would push district councils’ shortfall to £900m next year, reported The Guardian.

“District councils face a perfect storm. Inflation and pay pressures are driving up our costs just as the cost of living crisis bites for our residents and fuels demand for our services,” Sharon Taylor, the DCN’s vice-chair and finance spokesperson and the Labour leader of Stevenage district council was quoted as saying.

“We desperately don’t want to cut back on leisure services or welfare support. But the risk is that something will have to give.”

Sadiq Khan demands rent freeze as London renters in leakiest homes face £1,000 premium on energy bills

06:00 , Sravasti Dasgupta

London mayor Sadiq Khan has called for an immediate private rent freeze, as new analysis shows renters in the capital’s most poorly-insulated homes face paying a premium of almost £1,000.

City Hall figures shared with The Independent shows that Londoners in the leakiest private rental homes – in energy-efficiency rating bands F and G – face a premium of £947 a year.

The Labour mayor said: “The government must also give me the powers to stop rents rising in the capital which would save Londoners £3,000 over two years, and curb the inflationary pressure of rents on household budgets.”

Adam Forrest reports:

London renters in leakiest homes face £1,000 premium on energy bills

'No reversal of policy' says Treasury on mini-Budget

05:35 , Sravasti Dasgupta

While the government has come under fire for its mini-Budget presented last week, a Treasury source said to Sky News that there “won’t be any reversal of policy”.

The source added that chancellor Kwasi Kwarteng will not be resigning.

Earlier Mr Kwarteng vowed to push on with the government’s radical borrowing-fuelled tax cut spree despite growing calls to “change course” amid ongoing market turmoil.

What Rishi Sunak predicted about Liz Truss’s ‘fairytale’ economic plans

05:21 , Sravasti Dasgupta

Rishi Sunak is reported to be avoiding Conservative party conference this year, so that Liz Truss can “own” the unfolding economic chaos.

During a leadership debate on 15 July Mr Sunak accused his rival of “fairytale economics” by promising unfunded tax cuts.

On 21 August Mr Sunak’s campaign team put out a statement warning that Truss’s economic policy could cause an “inflationary spiral”.

Jon Stone reports:

What Rishi Sunak predicted about Liz Truss’s ‘fairytale’ economic plans

Calls for Truss to ‘come out of hiding’

04:58 , Sravasti Dasgupta

Calls have grown for Liz Truss to come out of hiding after the Bank of England was forced to intervene on Wednesday to prevent a major pension crisis.

Read more:

Calls for Liz Truss to ‘come out of hiding’ to fix ‘economic disaster’ - follow live

‘Inevitable’ Tories will lose next election, says former Conservative MSP

04:00 , Rory Sullivan

A former Conservative MSP who believes Liz Truss has “lost control” of the economy has said it is now safer in the hands of a Labour government.

Professor Adam Tomkins, who was Glasgow’s MSP, added that it was “inevitable” the Tories would lose the next election as a result of their handling of the economy.

“That is an extraordinary thing to have to say and I’m saying it because of what Kwasi Kwarteng has done to the market in the last few days,” he told the BBC.

“It’s perfectly clear the economic future of the UK would be safer hands if Labour were in power than the Conservatives.”

Voices: How did we find ourselves in such dire financial trouble?

03:00 , Rory Sullivan

Our chief business commentator James Moore has this report about the UK’s financial trouble:

How did we find ourselves in such dire financial trouble? | James Moore

Tory MPs are not panicking yet – it’s worse than that

02:00 , Rory Sullivan

John Rentoul writes about discontent within the Tory party over the government’s handling of the economy:

The speed of events is stunning. Truss has been prime minister for 22 days, 12 of which were taken up with mourning the death of the Queen. Yet at least one Tory MP is already privately predicting that Truss will be gone by Christmas.

Read more here:

Tory MPs are not panicking – it’s worse than that | John Rentoul

Rishi Sunak to skip Conservative party conference

01:01 , Rory Sullivan

Tory leadership runner-up Rishi Sunak will not attend the upcoming Conservative party conference.

The former chancellor has previously warned that Liz Truss’s economic policies could harm the economy.

Rishi Sunak to skip Conservative party conference

What are government bonds and how will the Bank of England use them to stabilise markets?

Wednesday 28 September 2022 23:59 , Rory Sullivan

Earlier today, the Bank of England decided to buy up long-dated gilts to shore up the British economy.

My colleague Joe Sommerlad explains how government bonds work:

What are government bonds?

No 10 rubbishes link between mini-Budget and sterling crisis

Wednesday 28 September 2022 23:00 , Rory Sullivan

In an earlier post, we mentioned that the government rejects the idea that its mini-Budget caused the currency crisis.

This argument comes despite the pound slumping immediately after Mr Kwarteng’s announcement on Friday.

Sky New’s Sam Coates has more details on No 10’s rebuttal.

“Ministers in cabinet rubbish the link between Friday’s statement and today’s turmoil,” he tweeted.

Don’t make NHS and public services pay the bill for tax cuts, Kwarteng told

Wednesday 28 September 2022 22:00 , Rory Sullivan

Kwasi Kwarteng has been warned it would be an “act of national vandalism” if he imposes austerity measures on the NHS and other public services to calm the turmoil caused by his tax giveaways to the rich.

The chancellor is expected to use a statement on 23 November to announce belt-tightening measures in a bid to persuade the markets that he can get the UK’s public finances back under control following last week’s mini-Budget.

Treasury sources confirmed that cabinet ministers are to be asked to find “efficiency savings” in budgets, with neither health nor any other department exempt.

Don’t make NHS and public services pay the bill fortax cuts, Kwarteng told

British government willing to have ‘serious dialogue’ about NI protocol, says Coveney

Wednesday 28 September 2022 21:00 , Rory Sullivan

Turning to Brexit momentarily...

The UK government is willing to engage in “serious dialogue” about the Northern Ireland Protocol, the Irish foreign minister has said.

Simon Coveney said Westminster’s messaging around this topic appeared to have mellowed. British ministers have previously threatened to unilaterally override the agreement, something Brussels says would constitute a breach of international law.

After meeting the Northern Ireland secretary Chris Heaton-Harris in Country Down, Mr Coveney said their discussion had focused on rebuilding partnerships.

Referring to the protocol, he said: “We know what the obstacles are, they have been there for too long.

“There are new people effectively in the relationships now.

“It is not a coincidence that the new Prime Minister (Liz Truss) has met President (Ursula) von der Leyen, President (Joe) Biden, the Taoiseach (Micheal Martin).

“The conversations, from my understanding, have been positive in terms of trying to find a sensible way forward.

“From an EU perspective, they don’t want this issue to drag on.

“The last thing the EU wants to be doing is taking the British government to court.”

Idea government can produce growth is ‘ridiculous’, says former BoE chief adviser

Wednesday 28 September 2022 20:30 , Rory Sullivan

A former chief adviser at the Bank of England has said the idea the government can produce growth in the next two years is “ridiculous”.

Pointing to the current problems with the gilts market and with mortgages, Charles Goodhart told Times Radio: “You can say goodbye to growth over the period from now until the general election.”

PM silent on financial crisis

Wednesday 28 September 2022 20:05 , Rory Sullivan

Liz Truss has been accused of going into hiding.

Although she continues to give foreign policy updates on social media (see below), she has yet to comment publicly about the financial crisis unleashed by her government’s policies.

IMF rebuke has echoes of 1976 – but this crisis could be much worse

Wednesday 28 September 2022 19:47 , Rory Sullivan

For those with extra long memories, there are terrible echoes of 1976 reverberating around our minds right now. Not, sadly, the long hot summer, but the great IMF crisis that tested the early days of James Callaghan’s Labour government, writes Sean O’Grady.

IMF rebuke has echoes of 1976 – but this crisis could be much worse

Calls for Truss to ‘come out of hiding’ as Bank fights turmoil caused by budget

Wednesday 28 September 2022 19:26 , Rory Sullivan

Liz Truss was accused of hiding away while her tax giveaway budget caused economic turmoil, with the Bank of England forced to intervene to prevent a crisis in the UK’s major pension funds.

The Bank embarked on an estimated £65bn buy-up of bonds amid what a Treasury source described to The Independent as “serious concerns about the short-term financial stability of some of the major pension funds in the UK”.

Calls for Truss to ‘come out of hiding’ as Bank fights turmoil caused by budget

Mini-Budget was ‘worst unforced economic policy error of lifetime', says think tank boss

Wednesday 28 September 2022 19:10 , Rory Sullivan

The current financial crisis is “by far the worst unforced economic policy error of my lifetime”, the chief executive of the Resolution Foundation has said.

Torsten Bell, whose think tank aims to improve the lives of those on low incomes, said the destruction sparked by Kwasi Kwarteng’s mini-Budget on Friday “is hard to comprehend”.

Ministers must give financial statement before November, senior MP warns

Wednesday 28 September 2022 18:50 , Rory Sullivan

The government must give another financial statement soon, a senior Tory politician has said.

As the economic fallout of the mini-Budget continues to be felt, Sir Roger Gale told BBC News: “I don’t think we can wait until November, which is the current intention as I understand it.

“I think, yes, we need a statement in very short order indeed to steady the nerves, steady the market and set out very clearly what the business plan is so that everybody understands properly where we are going.”

The MP for Thanet added that the mini-Budget’s “lack of clarity” had caused “the run on the pound”.

World baffled by UK government’s economic policies, says former Treasury minister

Wednesday 28 September 2022 18:30 , Rory Sullivan

Companies and investors across the world are “wondering what on earth is going on in the UK”, a crossbench peer has said.

Former Treasury minister Lord O’Neill told BBC Radio 4: “This is a breathing room for the government, in my view, to seriously think what on earth is it really trying to do and...this idea that you can just magically quadruple productivity by a tiny corporate tax policy reversal is at the core of why investors and companies all over the world, never mind here at home, are wondering what on earth is going on in the UK.”

Government denies responsibility for market turmoil as pound slumps

Wednesday 28 September 2022 18:05 , Rory Sullivan

The government has attempted to deny responsibility for Britain’s financial woes, saying that all major economies are suffering as a result of Vladimir Putin’s war in Ukraine.

Liz Truss and chancellor Kwasi Kwarteng have been widely blamed for spooking investors through their plans to cut tax for high earners and to increase state borrowing.

After Mr Kwarteng gave his mini-Budget on Friday, the pound plunged, reaching an all-time low against the dollar on Monday.

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Government denies responsibility for market turmoil as pound slumps

Video: Angela Rayner mocks Liz Truss’s pork market quote during party conference speech

Wednesday 28 September 2022 17:51 , Rory Sullivan

What would happen if the IMF bailed out Britain?

Wednesday 28 September 2022 19:02 , Rory Sullivan

Yesterday, the International Monetary Fund (IMF) urged the British government to “re-evaluate” its tax-slashing, heavy-borrowing mini-Budget.

Some economists have even speculated that the UK economy could eventually need an IMF bailout.

My colleague Joe Sommerlad takes a look at how this would work:

What would happen if the IMF bailed out Britain?

Labour considers tax hike on stocks and shares

Wednesday 28 September 2022 17:20 , Rory Sullivan

Labour is considering whether to increase taxes on stocks and shares, Keir Starmer has indicated.

The party leader told Sky News: “The term wealth tax means different things to different people.

“For example, in relation to people who earn their income from stocks and shares and dividends, then, yes, we are looking at what is a fair taxation approach to that and we will set it out.”

Government denies causing market turmoil

Wednesday 28 September 2022 16:58 , Rory Sullivan

The government has denied causing the sterling crisis, blaming Russia’s war in Ukraine instead.

The Treasury’s financial secretary Andrew Griffith claimed that the dramatic slide in the pound was not the result of the chancellor’s mini-Budget spooking investors.

“We are seeing the same impact of Putin’s war...every major economy is dealing with exactly the same issues,” the Tory MP told Sky News.

Kwarteng will not resign, say Treasury sources

Wednesday 28 September 2022 16:40 , Rory Sullivan

Chancellor Kwasi Kwarteng is not considering his position, Treasury sources have said.

The Truss ally has come under attack after his mini-Budget last week threw the markets into turmoil. The International Monetary Fund (IMF) and economists have warned the British government that an urgent change of tack is needed.

Tory politicians are among those who think his chancellorship will not last long. “Kwasi is toast,” one serving minister said.

However, the chancellor is determined to stay in his position and to keep his policies, treasury sources have told ITV’s Shehab Khan:

Voices: Where is Liz Truss? Our prime minister has gone missing

Wednesday 28 September 2022 16:29 , Rory Sullivan

Despite the dangers facing the British economy, Liz Truss has not spoken in public since her talk at the UN last week, writes John Rentoul.

Since then, markets have gone into meltdown, with chancellor Kwasi Kwarteng standing by his mini-Budget, despite it causing the pound to plunge to its lowest levels against the dollar.

Writing about Ms Truss’s silence, Rentoul says:

“Truss is a new prime minister, who has promised to do things differently. She is certainly delivering on that promise, and hiding from the people is her latest way of thumbing her nose at conventional wisdom.”

Where is Liz Truss? Our prime minister has gone missing | John Rentoul

Bank of England intervention stopped mass insolvencies of pension funds, report claims

Wednesday 28 September 2022 16:01 , Andy Gregory

There would have been mass insolvencies of pension funds by this afternoon if the Bank of England had not intervened in the gilt market, according to Sky News.

“It’s very similar in kind of wholesale terms to what we saw with Northern Rock when there was that run on that bank back in 2007,” reported the broadcaster’s economic editor Ed Conway. “It’s a vicious cycle. Essentially, people trying to withdraw money, which in turn sometimes leads inevitably to financial collapse.

“I am told there were a swathe of pension funds that, were it not for the government’s intervention, would have essentially collapsed by this afternoon – that’s how fast moving this crisis in the pensions markets was.”

Bank of England officials ‘cancel speaking engagements'

Wednesday 28 September 2022 15:45 , Andy Gregory

Two Bank of England officials are reported by Reuters to have pulled out of planned speaking appearances in the coming hours.

Tory MP warns Truss premiership could be over ‘within a month'

Wednesday 28 September 2022 15:40 , Andy Gregory

A Tory MP has told the Financial Times that Liz Truss must either fire Kwasi Kwarteng as chancellor or risk losing the keys to No 10 “within a month”.

Bank of England intervention ‘may not be enough to convince the sceptics'

Wednesday 28 September 2022 15:35 , PA

AJ Bell’s investment director has cast doubt on whether the Bank of England’s move to buy up government bonds will be enough to “convince the sceptics”.

The bank’s U-turn, due to end on 14 October, may not be enough to put “bond vigilantes” – investors who sell off bonds in protest against fiscal policy – “firmly back in their basket”, warned Russ Mould.

“The Bank is still going to try and navigate inflation on one hand and the threat of recession on the other, while at the same time trying to keep an eye on sterling and market volatility. It’s not a very easy balancing act,” he said.

“Having probably given the market a lesser-rate hike than it expected last week and to confirm that it was committed to quantitative tightening, to then have to come back to quantitative easing a week later ... it’s not going to convince the sceptics.”

EU ‘will not back down’ on Brexit protocol, Barnier says

Wednesday 28 September 2022 15:32 , Andy Gregory

The EU’s former Brexit negotiator Michel Barnier has warned that the bloc “must not and will not back down” on the Northern Ireland Protocol.

During a speech at Iveagh House in Dublin, Mr Barnier said that the EU had worked for six years to “look for technical solutions to the problem created by Brexit”, which he called “a unilateral decision by one party with negative impacts for itself, first of all, and for the 27 other member states”.

Describing himself as having worked with “objectivity, without any kind of ideology, just to find rational solutions to the problem created by Brexit, and only by Brexit”, Mr Barnier said that – despite “dogmatism from the consecutive British governments” – an agreement, including the Northern Ireland Protocol, was reached.

“The European Union must not and will not back down on the protocol of Ireland and Northern Ireland. We must ask that it be respected by the British government. This is international law.”

‘This is not conservatism’, says ex-No 10 chief of staff urging rethink

Wednesday 28 September 2022 15:25 , Andy Gregory

Our political correspondent Adam Forrest reports:

Nick Timothy, former No 10 chief of staff under Theresa May, has called for a rethink, saying the mini-Budget was “reckless and ideological and is a disaster for the savings and livelihoods of ordinary people”.

He tweeted: “The libertarian right has captured the government and pursued a plan they were warned against.”

Mr Timothy added: “This is not conservatism, and it is not what conservatives do. Ideology and unnecessary risks with market confidence are supposed to be what the other side does. We do need a different plan – but this is a disaster that should never have happened.”

Labour would not impose 50p top rate of income tax, Starmer says

Wednesday 28 September 2022 15:24 , Andy Gregory

Sir Keir Starmer has said he was not suggesting imposing a 50p top rate of income tax – but instead was committing to restoring it to 45p.

Asked about the prospect by BBC News, the Labour leader said: “We are not suggesting that, we are simply saying we will reverse the cuts.’’