Markets on alert as Truss outlines growth plan
Markets will focus on Liz Truss’s first speech as Prime Minister to the Tory party conference in which she will insist there can be no more “drift and delay” and say that her opponents “prefer protesting to doing”.
She will seek to unite her party and reassure markets following a week of turmoil that has severely destabilised her position and her party.
Plans to minimise benefit rises, as well as lingering frustration and anger following Monday’s u-turn on scrapping the top rate of tax, risk overshadowing her message.
The party is deeply worried about perceived handouts to the wealthy while most people struggle with the rising cost of living and the Prime Minister refuses to rule out cuts to benefits.
Ms Truss will use her speech to highlight the “immense” scale of the challenges facing Britain, including Russia’s invasion of Ukraine, the effects of Covid-19 and a global economic crisis.
She is expected to argue that economic pressures mean Britain must “do things differently”, even if that means difficult decisions in government.
“Whenever there is change, there is disruption,” she will say. “Not everyone will be in favour. But everyone will benefit from the result — a growing economy and a better future.”
Investors will be keen to hear evidence that her plan will boost economic growth and the FTSE 100 opened cautiously lower, down more than 40 points to 7,043.50 after the first half hour of trading.
Sterling has recovered some ground after last week’s rout and was quoted at $1.1443 early today.
The Bank of England chose not to buy any further bonds yesterday under its emergency two-week operation to calm gilt markets..
Having bought only £22 million of UK government bonds on Monday, the latest lack of intervention suggests that the Bank has so far succeeded in halting a dramatic sell-off without having to spend anywhere near what it had originally set aside.