Further tax plans

Kwarteng seeks to calm nerves after turmoil

Kwasi Kwarteng: calming nerves

Chancellor Kwasi Kwarteng sought to calm nerves by announcing a medium term fiscal plan will take place in November alongside independent economic forecasts.

The next plan will be released on 23 November and will set out rules to bring down government debt, said the Treasury. 

It will be accompanied by a forecast from the Office for Budget Responsibility. A full Budget will be presented in the spring on a date yet to be confirmed.

The latest statement from the Treasury follows a weekend of turmoil on the currency markets, with the pound hitting all-time lows and falling close to parity with the US dollar.

The pound fell 1.8% to $1.066 and the yield on gilts soared to 15-year highs as the markets assessed the impact of the government’s borrowing commitments.

Bank of England Governor Andrew Bailey said that the Monetary Policy Committee would discuss the impact of the Chancellor’s new mini-budget when it meets again in early November – quashing speculation that the Bank might announce emergency measures this week to shore up the pound.

However, market traders believe the Bank may be forced into hiking interest rates within the next two days the pound resumes its downwards plunge – amid speculation that the base rate, currently 2.25%, could hit 6% next year.

Government departments are due to announce a range of measures to stimulate investment and speed up decisions to get the economy moving.

The next phase of the Growth Plan, to be announced next month and in early in November, includes changes to the planning system, business regulations, childcare, immigration, agricultural productivity, and digital infrastructure.

As part of that programme, there will be outline regulatory reforms to ensure the UK’s financial services sector remains globally competitive.

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