The UK just stepped back from the brink. But there’s more trouble ahead
2 years, 2 months ago

The UK just stepped back from the brink. But there’s more trouble ahead

CNN  

London CNN Business — The decision by Jeremy Hunt, the new UK finance minister, to jettison the bulk of Prime Minister Liz Truss’ much-maligned plans to boost growth has come as a huge relief to investors, easing their worries about the sustainability of government finances. It said it sees “additional downside risks to growth” following Hunt’s announcements on Monday. “The Chancellor has created some level of stability in the markets, but has created total instability in people’s households,” said Simon Francis, coordinator of the End Fuel Poverty Coalition, a group of civil society organizations. Cuts to public spending, the so-called “austerity” that defined the UK’s policy approach in the aftermath of the 2008 financial crisis, would be politically unpopular and hurt vulnerable sections of society.

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History of this topic

‘Tax rises inevitable’ after Bank of England money-printing losses
6 months, 2 weeks ago

‘Tax rises inevitable’ after Bank of England money-printing losses

The Telegraph  

Tax rises are inevitable under the next government because of heavy losses created by the Bank of England’s money printing scheme, Goldman Sachs has warned. Higher borrowing costs are adding to the strain on Britain’s public finances which will force the next chancellor to raise taxes even further, James Moberly, an economist at the investment bank, said. Mr Moberly warned …

Lack of money for tax cuts persuades Rishi Sunak to call general election
7 months ago

Lack of money for tax cuts persuades Rishi Sunak to call general election

The Telegraph  

Mr Sunak’s announcement of an uplift in defence spending to 2.5 per cent of GDP further squeezed the amount of money left for an autumn budget, and there were fears that economic variables, such as inflation and growth, could go against the Government. Mr Sunak knew that an underwhelming pre-election budget would have done more damage than going to the …

Like the US Fed, Bank of England is edging toward interest rate cuts — but not quite yet
10 months, 3 weeks ago

Like the US Fed, Bank of England is edging toward interest rate cuts — but not quite yet

Associated Press  

LONDON — Just like the U.S. Federal Reserve, the Bank of England is edging toward cutting interest rates — though not quite yet. “We need to see more evidence that inflation is set to fall all the way to the 2% target, and stay there, before we can lower interest rates,” he said. Bailey also said the bank was keeping …

UK bond market rallies at sharpest pace in Europe amid interest rate hopes
1 year, 1 month ago

UK bond market rallies at sharpest pace in Europe amid interest rate hopes

The Telegraph  

The Government’s cost of short-term borrowing has fallen at the fastest pace in Europe today after the Bank of England’s chief economist raised hopes of interest rate cuts. The yield on two-year UK gilts, which are sensitive to moves in the outlook for interest rates, has dropped by eight basis points today to 4.61pc, its lowest level since June and …

Government bonds and pound rally amid pressure for mini-budget U-turn
2 years, 2 months ago

Government bonds and pound rally amid pressure for mini-budget U-turn

The Independent  

For free real time breaking news alerts sent straight to your inbox sign up to our breaking news emails Sign up to our free breaking news emails Sign up to our free breaking news emails SIGN UP I would like to be emailed about offers, events and updates from The Independent. Read our privacy policy UK government bonds and the …

‘Slow-moving car crash.’ There’s no quick fix for the UK market mess
2 years, 2 months ago

‘Slow-moving car crash.’ There’s no quick fix for the UK market mess

CNN  

London CNN Business — The Bank of England is struggling to contain a crisis triggered by the UK government’s brash plans to borrow heavily to pay for tax cuts, feeding fears that the country’s financial markets could once again spin out of control. “The market’s turned around and said, “We need you to do more.’” Bank of England Governor Andrew …

British pound falls after Bank of England chief rules out extending 'clearly temporary' help
2 years, 2 months ago

British pound falls after Bank of England chief rules out extending 'clearly temporary' help

ABC  

Britain's economy faced new shocks after the Bank of England ruled out extending an emergency debt-buying plan – and the government appeared to blame the independent central bank for the U.K.'s economic turmoil. Key points: Bank of England says it will not extend an emergency debt-buying plan introduced last month The bank's governor, Andrew Bailey, says the program will end …

Bank of England warns risk of UK financial crisis hasn’t gone away
2 years, 2 months ago

Bank of England warns risk of UK financial crisis hasn’t gone away

CNN  

London CNN Business — For the second time in two days, the Bank of England has been forced to offer extra support to UK markets still reeling from the government’s announcement last month that it would slash taxes and increase borrowing. The central bank warned Tuesday that there was still a “material risk to UK financial stability” from a sharp-sell …

Explained | Britain’s week of market turmoil and the tax cut reversal
2 years, 2 months ago

Explained | Britain’s week of market turmoil and the tax cut reversal

The Hindu  

The story so far: On Monday, October 3, recently elected United Kingdom Prime Minister Liz Truss was forced to reverse plans to bring in Britain’s highest tax cuts in 50 years, after a “minibudget” presented by her Finance Minister Kwasi Kwarteng set in motion a tumultuous week for the country’s markets. Announcing the reversal and acknowledging that the budget plan …

The UK is gripped by an economic crisis of its own making
2 years, 2 months ago

The UK is gripped by an economic crisis of its own making

CNN  

London CNN Business — A week ago, the Bank of England took a stab in the dark. After verbal assurances by the UK Treasury and Bank of England failed to calm the panic — and the International Monetary Fund delivered a rare rebuke — the UK central bank pulled out its bazooka, saying Wednesday it would print £65 billion to …

UK central bank intervenes in market to halt economic crisis
2 years, 2 months ago

UK central bank intervenes in market to halt economic crisis

Associated Press  

LONDON — The Bank of England took emergency action Wednesday to stabilize U.K. financial markets and head off a crisis in the broader economy after the government spooked investors with a program of unfunded tax cuts, sending the pound tumbling and the cost of government debt soaring. The Bank of England said it would buy long-term government bonds over the …

Bank of England to buy U.K. government bonds to stabilise financial markets
2 years, 2 months ago

Bank of England to buy U.K. government bonds to stabilise financial markets

The Hindu  

The Bank of England said on Wednesday that it would buy as many long-dated government bonds as needed between now and October 14 to stabilise financial markets, after a slump in British gilt prices since a government fiscal statement on Friday. Citing potential risks to U.K. financial stability, the BoE also said it would delay the start of a programme …

IMF criticizes huge UK tax cuts and urges a rethink
2 years, 2 months ago

IMF criticizes huge UK tax cuts and urges a rethink

CNN  

London CNN Business — One of the world’s leading multilateral financial institutions has joined a chorus of criticism of huge tax cuts announced by the UK government last week that sent the pound plunging to a record low. “We understand that the sizable fiscal package announced aims at helping families and businesses deal with the energy shock and at boosting …

Bank of England will buy UK bonds at ‘whatever scale’ necessary to halt crash
2 years, 2 months ago

Bank of England will buy UK bonds at ‘whatever scale’ necessary to halt crash

CNN  

London CNN Business — The Bank of England said Wednesday it would buy UK government debt “on whatever scale is necessary” in an emergency intervention to halt a bond market crash that it warned could threaten financial stability. “This repricing has become more significant in the past day — and it is particularly affecting long-dated UK government debt,” the central …

Bank of England forced to intervene in markets over ‘material risk’ to UK economy
2 years, 2 months ago

Bank of England forced to intervene in markets over ‘material risk’ to UK economy

The Telegraph  

The Bank of England has been forced to step into bond markets amid market turmoil that has sent government borrowing costs soaring and posed a risk to financial stability. It said: “Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability." “The Bank is monitoring developments in financial markets very closely …

Markets are now treating UK bonds like Greek and Italian debt
2 years, 2 months ago

Markets are now treating UK bonds like Greek and Italian debt

CNN  

London CNN Business — The pound may have paused its headlong crash toward parity with the US dollar, but the damage to the UK economy sparked by Prime Minister Liz Truss’ huge tax-cutting gamble is still rippling through financial markets. “This is a situation where government borrowing costs — and therefore all our borrowing costs — are incredibly vulnerable,” economist …

Pound plunge, the latest ill omen as market stress rises
2 years, 2 months ago

Pound plunge, the latest ill omen as market stress rises

The Hindu  

Sterling slumped to a record low on Monday, and a renewed selloff in British gilts pushed euro-zone yields higher as the fall out from last week's fiscal statement in Britain roiled markets for a second session. Share markets around the world also slid as concerns about high interest rates continued to put pressure on the financial system, though in a …

British pound, bonds roiled as tax-cut plans spook investors
2 years, 2 months ago

British pound, bonds roiled as tax-cut plans spook investors

Live Mint  

The selloff in U.K. financial markets accelerated on investors’ worries that the country’s largest tax cuts in decades would spark higher inflation and put government finances at risk. The market turbulence is shaping up as a major challenge for new U.K. Prime Minister Liz Truss, whose government has taken a sharp U-turn on economic policy compared with previous Conservative governments …

Tax cut plans pull British pound to four decade lows
2 years, 2 months ago

Tax cut plans pull British pound to four decade lows

The Hindu  

The British pound has resumed a slide against the U.S. dollar that picked up pace last week after the U.K.’s new government outlined plans to cut taxes and boost spending. Treasury chief Kwasi Kwarteng announced the sweeping tax cuts that he said would boost economic growth and generate increased revenue without introducing corresponding spending reductions. The news triggered the pound’s …

UK mini-budget shakes the stock market, benefits the wealthy
2 years, 3 months ago

UK mini-budget shakes the stock market, benefits the wealthy

Al Jazeera  

The British government has unveiled a new mini-budget in the parliament, intending to cut household taxes and energy bills while driving economic growth. In what represents the most significant tax cut budget since 1972, the new finance minister Kwasi Kwarteng’s sweeping new budget will see cuts to national insurance, stamp duty and the top tax rate. However, Rachel Reeves, Labour’s …

Bank of England urged to call emergency rates meeting next week to rescue pound
2 years, 3 months ago

Bank of England urged to call emergency rates meeting next week to rescue pound

The Telegraph  

The Bank of England has been urged to raise interest rates as soon as next week to help the pound from further weakening. Meanwhile, UK bond yields were on the rise, with the 10-year gilt yields seeing their biggest one-day surge on record in Bloomberg data. Deutsche Bank analysts said there are "very strong signals" that the market is no …

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