BANK of England (BoE) Governor Andrew Bailey announced yesterday morning that there will be no more government bond-buying by the Bank after tomorrow, regardless of the consequences for the UK economy.
Bailey told the BBC that he had stayed up all night to try and think of a way to calm down the markets.
He claimed the Bank is doing everything it can, but it is now up to companies to arrange their own affairs, warning that pension funds in particular have ‘an important task’ to ensure they are resilient. ‘I’m afraid this has to be done, for the sake of financial stability,’ he said.
Business Secretary Jacob Rees-Mogg turned his ire on the Bank, claiming: ‘What has caused the effect in pension funds… is not necessarily the mini-budget. It could just as easily be the fact that the day before the Bank of England did not raise interest rates as much as the (US) Federal Reserve did.’
‘Jumping to conclusions about causality is not meeting the BBC’s requirement for impartiality’ Rees-Mogg then went on, targeting the BBC, after a suggestion the chancellor’s actions had been the trigger for the fluctuations in the value of the pound and government bonds.
In the UK, economic volatility which has exploded, following new Chancellor Kwasi Kwarteng’s massive tax giveaway to the very rich in his mini-budget, ‘government sources’ have been quoted anonymously in the Tory press, blaming the Bank for UK economic turmoil, with the ‘sources’ attacking it for being too slow to raise interest rates.
PM Truss’ first Prime Minister’s Questions in the House of Commons, was dominated by the collapsing UK economy yesterday.
However, it was opened by Graham Stringer MP asking if she would stick to the Tory pledge to outlaw no-fault evictions, to which she replied that she would commit to that.
Starmer’s first question was was about Rees Mogg’s comments that UK market turmoil wasn’t sparked by the mini-budget.
Asked: ‘Does the prime minister agree with him?’ Truss claimed that ‘as a result of our action… we will see higher growth and lower inflation.’
Starmer accused Truss of ‘ducking the question’ which shows why investors have lost confidence in her government.
‘We’re seeing interest rates rising globally in the face of Putin’s appaling war in Ukraine,’ Truss claimed.
Starmer said the economy is ‘in turmoil’, people are ‘worried sick’ and ‘won’t forgive’ the Tories for sending mortgage costs through the roof. He asked Truss when the government will reverse its ‘kamikaze budget’.
He accused Truss of going ahead with £18bn of tax cuts for the richest businesses and ‘those who live off stocks and shares’.
He asked why does Truss expect working people to pick up the bill for unfunded tax cuts for those at the top. ‘Who voted for this? Not home owners paying extra on their mortgages, not working people paying for tax cuts for the largest companies, not even most of the MPs behind the PM who know you can’t pay for tax cuts on the never-never.’
Does she think the public will ever forgive the Tory party if they continue with this ‘madness’ and ‘kamikaze budget?’
Truss was then asked: ‘Will she now give up her desperate plan to save her chancellor’s skin by scape-goating the governor of the Bank of England?’
Then in response to calls for a general election, Truss’s final response during her first Prime Minister’s Questions in the House of Commons yesterday lunchtime, was: ‘Mr Speaker, I think the last thing we need is a General Election.’
