London Daily

Focus on the big picture.
Saturday, Oct 18, 2025

Bank of England takes emergency action to stabilize UK economy, after earlier IMF warning

Bank of England takes emergency action to stabilize UK economy, after earlier IMF warning

The Bank of England has stepped in to stabilize financial markets after the British government’s tax-cutting plans caused economic chaos.
In an emergency intervention, the central bank warned of a “material risk to UK financial stability” if market dysfunction continued.

It came after the IMF urged the UK government to rethink its fiscal strategy that saw the pound plummet to a record low against the US dollar this week.

On Wednesday, the Bank of England said it would buy long-dated government bonds — issued to support public spending — on “whatever scale is necessary”.

The strategy is designed to reduce interest rates on government debt.

“The purpose of these purchases will be to restore orderly market conditions,” the bank said in a statement, adding that the purchases would be underwritten by the Treasury.

The UK has faced financial instability since Chancellor Kwasi Kwarteng issued a mini-budget last Friday aimed at boosting growth through tax cuts and increased spending.

The fiscal plan requires £72billion of additional government borrowing in the next six months. Following the Bank of England’s announcement on Wednesday, the pound fell further in value against the US dollar — dropping by 1.5 percent.

The latest UK fiscal plan included tax cuts for the highest earners, with their tax rate dropping to 40 percent from 45 percent, alongside a one percent cut for earners in the lowest band of income tax.

It also canceled a planned rise in corporation tax from 19 percent to 25 percent and scrapped rules that limit bankers’ bonuses.

Kwarteng, who was appointed Chancellor on Sept. 6, said he believed the budget would boost economic growth in the UK.

On Tuesday evening, the International Monetary Fund said that Britain should reconsider planned tax cuts that would “likely increase inequality”.

“The Nov. 23 budget will present an early opportunity for the UK government to consider ways to provide support that is more targeted and re-evaluate the tax measures, especially those that benefit high income earners,” the agency said.

A former deputy governor of the IMF — established in 1945 to ensure global financial stability — said it was unusual for the agency to criticize a G7 nation.

Adnan Mazarei told the BBC that such statements are “common with regard to emerging market countries with problematic policies, but not often about G7 countries”.

Keir Starmer, the leader of the UK’s left-leaning opposition party Labour, accused the Conservative government of making a “mess” of the economy.

“Quite often when the markets are jittery, when the pound falls, it’s because of some international event — conflict in Ukraine, a cost-of-living crisis, energy crisis. This is self-inflicted by the government,” Starmer told LBC radio.
Newsletter

Related Articles

0:00
0:00
Close
S&P Downgrades France’s Credit Rating, Citing Soaring Debt and Political Instability
Ofcom Rules BBC’s Gaza Documentary ‘Materially Misleading’ Over Narrator’s Hamas Ties
Diane Keaton’s Cause of Death Revealed as Pneumonia, Family Confirms
Former Lostprophets Frontman Ian Watkins Stabbed to Death in British Prison
"The Tsunami Is Coming, and It’s Massive": The World’s Richest Man Unveils a New AI Vision
Outsider, Heroine, Trailblazer: Diane Keaton Was Always a Little Strange — and Forever One of a Kind
Dramatic Development in the Death of 'Mango' Founder: Billionaire's Son Suspected of Murder
Two Years of Darkness: The Harrowing Testimonies of Israeli Hostages Emerging From Gaza Captivity
EU Moves to Use Frozen Russian Assets to Buy U.S. Weapons for Ukraine
Europe Emerges as the Biggest Casualty in U.S.-China Rare Earth Rivalry
HSBC Confronts Strategic Crossroads as NAB Seeks Only Retail Arm in Australia Exit
U.S. Chamber Sues Trump Over $100,000 H-1B Visa Fee
Shenzhen Expo Spotlights China’s Quantum Step in Semiconductor Self-Reliance
China Accelerates to the Forefront in Global Nuclear Fusion Race
Yachts, Private Jets, and a Picasso Painting: Exposed as 'One of the Largest Frauds in History'
Australia’s Wedgetail Spies Aid NATO Response as Russian MiGs Breach Estonian Airspace
McGowan Urges Chalmers to Cut Spending Over Tax Hike to Close $20 Billion Budget Gap
Victoria Orders Review of Transgender Prison Placement Amid Safety Concerns for Female Inmates
U.S. Treasury Mobilises New $20 Billion Debt Facility to Stabilise Argentina
French Business Leaders Decry Budget as Macron’s Pro-Enterprise Promise Undermined
Trump Claims Modi Pledged India Would End Russian Oil Imports Amid U.S. Tariff Pressure
Surging AI Startup Valuations Fuel Bubble Concerns Among Top Investors
Australian Punter Archie Wilson Tears Up During Nebraska Press Conference, Sparking Conversation on Male Vulnerability
Australia Confirms U.S. Access to Upgraded Submarine Shipyard Under AUKUS Deal
“Firepower” Promised for Ukraine as NATO Ministers Meet — But U.S. Tomahawks Remain Undecided
Brands Confront New Dilemma as Extremists Adopt Fashion Labels
The Sydney Sweeney and Jeans Storm: “The Outcome Surpassed Our Wildest Dreams”
Erika Kirk Delivers Moving Tribute at White House as Trump Awards Charlie Presidential Medal of Freedom
British Food Influencer ‘Big John’ Detained in Australia After Visa Dispute
ScamBodia: The Chinese Fraud Empire Shielded by Cambodia’s Ruling Elite
French PM Suspends Macron’s Pension Reform Until After 2027 in Bid to Stabilize Government
Orange, Bouygues and Free Make €17 Billion Bid for Drahi’s Altice France Telecom Assets
Dutch Government Seizes Chipmaker After U.S. Presses for Removal of Chinese CEO
Bessent Accuses China of Dragging Down Global Economy Amid New Trade Curbs
U.S. Revokes Visas of Foreign Nationals Who ‘Celebrated’ Charlie Kirk’s Assassination
AI and Cybersecurity at Forefront as GITEX Global 2025 Kicks Off in Dubai
DJI Loses Appeal to Remove Pentagon’s ‘Chinese Military Company’ Label
EU Deploys New Biometric Entry/Exit System: What Non-EU Travelers Must Know
Australian Prime Minister’s Private Number Exposed Through AI Contact Scraper
Ex-Microsoft Engineer Confirms Famous Windows XP Key Was Leaked Corporate License, Not a Hack
China’s lesson for the US: it takes more than chips to win the AI race
Australia Faces Demographic Risk as Fertility Falls to Record Low
California County Reinstates Mask Mandate in Health Facilities as Respiratory Illness Risk Rises
Israel and Hamas Agree to First Phase of Trump-Brokered Gaza Truce, Hostages to Be Freed
French Political Turmoil Elevates Marine Le Pen as Rassemblement National Poised for Power
China Unveils Sweeping Rare Earth Export Controls to Shield ‘National Security’
The Davos Set in Decline: Why the World Economic Forum’s Power Must Be Challenged
France: Less Than a Month After His Appointment, the New French Prime Minister Resigns
Hungarian Prime Minister Viktor Orbán stated that Hungary will not adopt the euro because the European Union is falling apart.
Sarah Mullally Becomes First Woman Appointed Archbishop of Canterbury
×