Man in a printing press workshop
It’s a very important day for the economy.
We will be hearing from Chancellor Kwasi Kwarteng in Parliament and tonight from Bank of England Governor Andrew Bailey at the important annual meeting of the International Monetary Fund in Washington DC.
Internationally, there are many questions about British economic policy, especially since the Bank of England is extending its emergency purchases of British government bonds by a second day due to significant risks to financial stability.
On Monday, the UK government’s borrowing costs continued to rise near levels recorded just after the mini-budget.
This also means continued pressure on the cost of mortgages and corporate lending. The bank is concerned about pension funds being forced to sell UK government bonds in a ‘bailout’ momentum.
However, the fundamental problem remains the same: markets are wondering if the government can find a solution to their challenges that is both workable and politically viable.
While we’ll also hear of some common global roots of the challenges of managing an energy shock and rising interest rates when the IMF releases its new forecast this afternoon, the Institute for Fiscal Studies’ separate Green Budget makes for sobering reading.
Slow growth for five years, highest government interest bill since 1950, third highest government borrowing since World War II. And the solution, if the Government sticks to its tax cut plan, will be £60bn in spending cuts. And that in less than three weeks until Halloween.
For the third time, the Bank of England is intervening to smooth things over, but it’s not a solution.
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