Latest book: Bank of England steps in amid ‘serious concerns’ for major pension funds

Bank of England won’t shy away from raising interest rates amid market turmoil

The bank of englandThe EU’s surprise monetary intervention came in response to “serious concerns” about the short-term financial stability of some “large pension funds”, a Treasury source said.

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.

Investors were spooked by Kwasi Kwartengplans to dramatically increase government borrowing, driving the book fall to a historic low against the dollar on Monday. Prime Minister Liz Truss has yet to speak publicly about the country’s financial difficulties.

The government has denied causing the sterling crisis, instead pointing the finger at Russia’s war in Ukraine, which it says is wreaking havoc on all major economies.

Speaking to Sky News, Treasury Financial Secretary Andrew Griffith defended the Chancellor’s plans, saying the pound’s dramatic fall was not the result of government economic policies.

“We are seeing the same impact of Putin’s war…all major economies are facing exactly the same problems,” the Tory MP said.

However, many senior Tories have warned the Government’s plan is unsustainable, with one saying ‘this inane madness cannot continue’.

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

Earlier in the day, the Bank of England decided to buy long-term gilts to support the British economy.

My colleague Joe Sommerlad explains how government bonds work:

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No 10 garbage link between the mini-budget and the pound crisis

In a previous article, we mentioned that the government rejects the idea that its mini-budget caused the monetary crisis.

This argument comes despite the pound falling just after Mr Kwarteng’s announcement on Friday.

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

“Cabinet ministers deny the link between Friday’s statement and today’s unrest,” he tweeted.

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Don’t make the NHS and public services foot the bill for tax cuts, says Kwarteng

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 quell the unrest caused by his tax giveaways to the wealthy.

The Chancellor is expected to use a statement on Nov. 23 to announce austerity measures to persuade markets that he can regain control of Britain’s public finances after last week’s mini-budget.

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

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UK government ready to have ‘serious dialogue’ on NI protocol, says Coveney

Let’s move on to Brexit for a moment…

The UK government is ready to engage in a “serious dialogue” on the Northern Ireland protocol, the Irish foreign minister has said.

Simon Coveney said Westminster’s messages on the matter appeared to have softened. British ministers have previously threatened to unilaterally override the deal, which Brussels says would be a breach of international law.

After meeting Northern Ireland Secretary Chris Heaton-Harris at Country Down, Mr Coveney said their discussion 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 actually in the relationships now.

“It is no coincidence that the new Prime Minister (Liz Truss) met with President (Ursula) von der Leyen, President (Joe) Biden, the Taoiseach (Micheal Martin).

“The conversations, from what I understand, have been positive in terms of trying to find a reasonable way forward.

“From the EU’s point of view, they don’t want this problem to drag on.

“The last thing the EU wants to do is take the UK government to court.”

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The idea that government can produce growth is ‘ridiculous’, says ex-BoE chief adviser

A former chief adviser to the Bank of England has said the idea that the government can deliver growth over the next two years is “ridiculous”.

Highlighting the current problems in the gilt and mortgage market, Charles Goodhart said Times Radio: “You can say goodbye to growth over the period from now until the legislative elections.”

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Prime Minister silent on the financial crisis

Liz Truss has been accused of hiding.

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

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

For those with very long memories, there are terrible echoes of 1976 ringing in our minds right now. Not, unfortunately, the long hot summer, but the great IMF crisis that tested the early days of James Callaghan’s Labor governmentwriting Sean O’Grady.

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Calls on Truss to ‘come out of hiding’ as Bank battles budget turmoil

Liz Truss has been accused of hiding as her tax gift budget caused economic turmoil as the Bank of England was forced to intervene to prevent a crisis at the UK’s major pension funds.

The Bank embarked on an estimated £65billion bond buyback amid what a Treasury source described to The Independent as “serious concerns about the short-term financial stability of some of the UK’s major pension funds”.

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The mini-budget was ‘the worst unforced economic policy mistake of a lifetime’, says think tank boss

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

Torsten Bell, whose think tank aims to improve the lives of low-income people, said the destruction caused by Friday’s Kwasi Kwarteng mini-budget “is hard to fathom”.

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Ministers must give financial statement by November, senior MP warns

The government is due to give another financial statement soon, a senior Conservative politician has said.

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

“I think so, we need a statement very quickly to calm the nerves, stabilize the market and very clearly define the business plan so that everyone correctly understands where we are going.”

The MP for Thanet added that the ‘lack of clarity’ in the mini-budget had caused ‘the pound rush’.

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