Kwarteng tells bank execs he is ‘working closely’ with BoE to calm markets
Kwasi Kwarteng has told a group of investment bank executives that he is “working closely” with the Bank of England to calm markets.
The chancellor and City minister Andrew Griffith said during a roundtable that the government has a “clear commitment to fiscal discipline” and outlined coming post-Brexit changes to financial services regulations, according to the Treasury.
Executives from UBS, Bank of America, Morgan Stanley, Citi and JP Morgan Chase were among those in attendance.
It comes as the Bank of England today announced it would start buying government bonds to stabilise the market.
The shock intervention has been triggered by rates on UK government debt surging to levels not seen since 1998.
The pound has also slumped to record lows against the USD in the days since last week’s radical package of tax cuts.
A Treasury spokesperson said Kwarteng told people at today’s meeting that “last Friday’s Growth Plan will expand the supply side of the economy through tax incentives and reforms, helping to deliver greater opportunities and bear down on inflation”.
They added: “Ahead of the upcoming Big Bang 2.0 deregulatory moment for financial services, the Chancellor discussed potential sectoral reforms that are targeted at boosting growth, generating investment, and delivering higher wages across the UK.
“The chancellor reiterated his view that ‘a strong UK economy has always depended on a strong financial services sector’.”
Pressure is now mounting on Prime Minister Liz Truss to recall parliament from recess and for Kwarteng to deliver a statement on the economy.
Labour leader Sir Keir Starmer said: “The government has lost control of the economy. It’s going to mean higher mortgages and higher prices.
“And what for? Unfunded tax cuts for the one per cent.
“They must recall parliament today and abandon this act of economic self-harm.”
It comes after the International Monetary Fund (IMF) last night said it was “monitoring developments” in the UK and called on Truss to “re-evaluate” her tax cuts.
“Given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture,” the IMF said in a statement.
“It is important that fiscal policy does not work at cross purposes to monetary policy.”