The International Monetary Fund’s warning over Liz Truss and Kwasi Kwarteng’s tax cuts for the rich is “very serious” and shows “what a mess the government has made of the economy”, Labour’s Sir Keir Starmer said as the pound fell to Asian trades. In a rare intervention, the IMF took aim at the government, warning that “large and untargeted fiscal packages” would “likely increase inequality” in Britain after the chancellor’s mini-budget on Friday sent sterling and bonds plummeting. low and gold yields will shoot up, reflecting the cost of borrowing. “Given elevated inflationary pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture, as it is important that fiscal policy does not operate in conflict with monetary policy,” an IMF spokesman said. The pound then fell on Wednesday morning to below $1.064 – still well above the record low of $1.03 earlier in the week – before climbing towards the relatively flat $1.08 seen for most of Tuesday.
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White House urges ‘fiscal prudence’ after UK turmoil
White House economic adviser Brian Dice said he was not surprised by the financial markets’ negative reaction to the UK’s tax cuts and borrowing plans. Top adviser Joe Biden, director of the White House National Economic Council, said he underscored the need to maintain “fiscal prudence, fiscal discipline.” Mr Deese said: “In a monetary tightening cycle like this, the challenge with this policy is that it just puts the monetary authority in a position to potentially move even tighter. I think that’s what you saw as a reaction.” “It is particularly important to maintain the focus on fiscal prudence, fiscal discipline,” he said. Adam Forrest28 September 2022 09:57 1664354583
Truss and Kwarteng must ‘urgently review’ tax cuts, says Starmer
The Government must “urgently review” its tax cuts, Sir Keir Starmer has insisted, arguing the Tories have lost the right to claim to be the party of fiscal responsibility. The Labor leader told BBC Radio 4’s Today show that there had been “self-inflicted” financial wounds to the economy, adding: “It is the worst of all the situations our country is in. “Instead of coming and flouting the IMF, the government should come and urgently review the plans it set out last Friday. The Conservative Party can never again claim to be the party of fiscal responsibility, they have lost the right to claim that after what they did last Friday.” Andy Gregory28 September 2022 09:43 1664353201
The FTSE is down more than 2 percent
The FTSE 100 index also fell sharply after opening on Wednesday, falling more than 2 percent at one stage – down almost 140 points at 6846.4 – and looks set to be headed for its lowest level in more than a year. PA28 September 2022 09:20 1664352751
House prices are expected to fall between 10% and 15%, experts say
Home prices could fall by about 10 percent next year, one mortgage broker suggested, in line with other analysts’ forecasts. “A key factor in house prices is how much people could afford for their monthly mortgage,” Ray Boulger, from estate agent John Charcol, told BBC Radio 4’s Today programme, adding that those considering buying “they will rethink those plans.” . Credit Suisse has also warned that higher interest rates and rising inflation could see UK house prices fall by between 10 and 15 per cent next year. Andy Gregory28 September 2022 09:12 1664352583
Cutting the top rate of income tax ‘was the right choice’, Kwarteng reportedly tells Tory MPs
Kwasi Kwarteng reportedly told Tory MPs that scrapping the top rate of income tax “was a tough choice but the right choice”, on a call last night about the volatile market response to his mini-budget. According to the Daily Telegraph’s Ben Reilly-Smith, via an MP on the call, the chancellor said markets were now “calming”, but stressed he was not “complacent”. Mr Kwarteng is quoted as saying he speaks to the governor of the Bank of England every day and has built up a “good working relationship”. Andy Gregory28 September 2022 09:09 1664351766
Mini budget risks permanent damage to UK credit rating, analysts warn
Kwasi Kwarteng’s mini-budget risks causing permanent damage to the UK’s credit rating, analysts have warned. “Large unfunded tax cuts are credit negative,” Moody’s Investors Service said in a statement reported by Bloomberg. The credit rating agency warned that the chancellor’s mini-budget “will lead to structurally higher deficits amid rising borrowing costs, weaker growth prospects and acute pressure on public spending stemming from the pandemic and a decade of austerity”. A “sustained confidence shock arising from market concerns about the credibility of the government’s fiscal strategy” could also “permanently weaken the affordability of UK debt”, Moody’s warned. Andy Gregory28 September 2022 08:56 1664351096
Bank of England rate hike could cause ‘perfect storm’, says Tory grandee
Britain could find itself in the “perfect storm” if the Bank of England raises interest rates, a senior Tory has said, warning he does not want to see another financial crash. “I think there are some real concerns that have been voiced and will continue to be voiced. I don’t think it’s entirely surprising. Nor do I think it is surprising that a Conservative Chancellor and Prime Minister are introducing a Conservative Budget,” Sir Roger Gale told Good Morning Britain. “Sorry, we’re not allowed to call it a budget, but that’s actually what it was. And there is a lot of good in that. It’s brave, and also very high risk. And it is the high risk that causes concern.” He added: “I know enough about finance to understand that markets don’t like things that they don’t expect and aren’t quite sure how to react to and I don’t think we should do too much of that. . The bad news is that the pound is now rising again because markets believe the bank is going to raise interest rates. “And if that happens, then we could have the perfect storm. I’m unfortunately old enough to remember the last financial meltdown, when … people would come into my office crying because they lost their homes and businesses. It was not a pretty sight and I don’t want to see it happen again.” Andy Gregory28 September 2022 08:44 1664350428
Truss and Kwarteng “blinded by ideology”, say Lib Dems
Liz Truss and Kwasi Kwarteng have been “completely blinded by ideology”, the Lib Dems’ Treasury spokesman claimed. Arguing that parliament, currently in recess, should be recalled to discuss the market turmoil, Sarah Olney said: “Tras and Kwarteng have been in government for three weeks and the IMF has already forced to issue a statement about their reckless financial situation. policy. “Both are completely blinded by ideology, which is suffering millions across the UK. We need to recall parliament to fix this mess.” Andy Gregory28 September 2022 08:33 1664350161
I’m closer to Blair than Corbyn, says Starmer
Sir Keir Starmer said the Labor Party under his leadership was closer to Sir Tony Blair’s than Jeremy Corbyn’s. He said he had “no regrets” about serving in Corbyn’s shadow cabinet but had to “lift the party off the canvas” after taking the helm. Asked on Radio Times if he was comfortable saying Labor was closer to Blair, Sir Keir said: “I certainly hope so because Tony Blair has won three elections and I want us to win the next election.” Sir Keir also indicated that he would not commit to a Labor conference vote in favor of proportional representation (PR) when drawing up Labour’s election manifesto. “The manifesto will be something that I will draw up with my team according to party rules,” he told BBC Radio 5 Live. Adam Forrest28 September 2022 08:29 1664349539
Kwarteng will meet with investment banks in a bid to allay fears
Kwasi Kwarteng will today step up efforts to reassure the city about his financial plans in meetings with investment banks. The chancellor is expected to stress the importance of reforms ministers will launch in the coming weeks to boost growth, including “Big Bang 2.0” measures to further deregulate financial markets. Andy Gregory28 September 2022 08:18
