London Daily

Focus on the big picture.
Thursday, Oct 30, 2025

Kwasi Kwarteng: Investors wary as economic plan brought forward

Kwasi Kwarteng: Investors wary as economic plan brought forward

The chancellor's decision to bring forward the date of his plan to balance the government's finances failed to reassure markets on Monday.

Government borrowing costs rose sharply after Kwasi Kwarteng said he would fast-track his plan to 31 October.

The plan will set out how he will fund tax cuts and reduce debt after his mini-budget sparked market turmoil.

An independent forecast of the UK economy's prospects will be published at the same time.

In the wake of the September mini-budget, the pound slumped to a record low, government borrowing costs surged and the Bank of England was forced to step in and take emergency action after the dramatic market movements put some pension funds at risk of collapse.

The volatility eased but on Monday the yields - or effective interest rates - on UK government bonds were almost at the levels seen at the height of the market turmoil.

Further efforts by the Bank of England to calm markets, along with the appointment of an experienced civil servant as Permanent Secretary to the Treasury also seemed to fall short.

Former Treasury chief Lord Macpherson warned the government that there could be an even tougher response from the financial markets in the coming weeks if the chancellor could not show his sums added up.

"Unless the government can restore economic credibility, the market response in the weeks ahead could be a whole lot worse than we've seen so far," he told the House of Lords.


'Critical to millions'


Mr Kwarteng had initially said he would wait for 23 November to give details of his economic plan but faced mounting pressure from his MPs to change course.

The new date means Mr Kwarteng's fiscal statement will be published before the Bank of England announces its latest decision on interest rates on 3 November.

The Bank's Monetary Policy Committee (MPC) is widely expected to raise interest rates for the eighth time since last December with many economists forecasting a sharper rise than previous increases.

But Mel Stride, chairman of the Treasury Select Committee, tweeted that he hoped Mr Kwarteng's decision to release the report earlier would result in a smaller rate rise.

He tweeted this would be "critical to millions of mortgage holders",

Noting that that the plan will be published on Hallowe'en, Labour deputy leader Angela Rayner tweeted: "Trick or cheat? The Tory horror show rattles on."

The OBR, the independent budget watchdog, will now publish a report alongside Mr Kwarteng's statement at the end of October. Its forecasts will give an indication of the health of the nation's finances.

There was some confusion after the chancellor denied there had been any changes to the date of the fiscal statement.

However, Treasury sources then clarified that the chancellor would, indeed, bring it forward and that it had simply been waiting to officially announce the change of date in Parliament.

Since then the government has been forced into a series of embarrassing climbdowns under growing pressure from its own MPs.

Last week, Mr Kwarteng scrapped a decision to cut the top rate of income tax.

Liz Truss faces a rebellion from her MPs over benefits


And on Monday, James Bowler was announced as the new Permanent Secretary to the Treasury.

Ms Truss fired Sir Tom Scholar, the civil servant who previously held the job and planned to bring in a high profile outsider - a move some feared would further spook the markets.

Ms Truss still faces a potential rebellion from her MPs after declining to say whether she would increase benefits in line with inflation next April.

Her approval ratings have plummeted since the mini-budget. The prime minister says her tax cuts will boost the UK economy after years of lacklustre growth.

But there are fears the government will have to borrow huge sums to fill the spending gap. The cost of government borrowing consequently jumped, as investors demanded higher rates of interest on UK government bonds.

This has fed through to the mortgage market where hundreds of products were pulled due to concerns about how to price these long-term loans.

Last week, interest rates on typical two and five-year fixed rate mortgages topped 6% for the first time in over a decade.


'Clearly nervous'


On Monday, the Bank of England announced measures to ensure an "orderly end" to an emergency bond buying scheme it was forced to launch after Mr Kwarteng pledged additional tax cuts on top of those outlined in the mini-budget.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said that the government and the Bank had launched "a two pronged attempt to calm markets" as the pound remained weak and government borrowing costs were rising again.

"Policymakers and politicians are clearly nervous about seeing a repeat of the mini-financial crisis unleashed following the presentation of the Truss administration's slash and spend plans," she said.

"All eyes will be on the independent assessment of his spending plans, and the risk is that if the numbers don't add up, the markets could take fright again."

Newsletter

Related Articles

0:00
0:00
Close
UK and Vietnam Sign Landmark Migration Deal to Fast-Track Returns of Irregular Arrivals
UK Drug-Pricing Overhaul Essential for Life-Sciences Ambition, Says GSK Chief
Princesses Beatrice and Eugenie Temporarily Leave the UK Amid Their Parents’ Royal Fallout
UK Weighs Early End to Oil and Gas Windfall Tax as Reeves Seeks Investment Commitments
UK Retail Inflation Slows as Shop Prices Fall for First Time Since Spring
Next Raises Full-Year Profit Guidance After Strong Third-Quarter Performance
Reform UK’s Lee Anderson Admits to 'Gaming' Benefits System While Advocating Crackdown
United States and South Korea Conclude Major Trade Accord Worth $350 Billion
Hurricane Melissa Strikes Cuba After Devastating Jamaica With Record Winds
Vice President Vance to Headline Turning Point USA Campus Event at Ole Miss
U.S. Targets Maritime Narco-Routes While Border Pressure to Mexico Remains Limited
Bill Gates at 70: “I Have a Real Fear of Artificial Intelligence – and Also Regret”
Elon Musk Unveils Grokipedia: An AI-Driven Alternative to Wikipedia
Saudi Arabia Unveils Vision for First-Ever "Sky Stadium" Suspended Over Desert Floor
Amazon Announces 14 000 Corporate Job Cuts as AI Investment Accelerates
UK Shop Prices Fall for First Time Since March, Food Leads the Decline
London Stock Exchange Group ADR (LNSTY) Earns Zacks Rank #1 Upgrade on Rising Earnings Outlook
Soap legend Tony Adams, long-time star of Crossroads, dies at 84
Rachel Reeves Signals Tax Increases Ahead of November Budget Amid £20-50 Billion Fiscal Gap
NatWest Past Gains of 314% Spotlight Opportunity — But Some Key Risks Remain
UK Launches ‘Golden Age’ of Nuclear with £38 Billion Sizewell C Approval
UK Announces £1.08 Billion Budget for Offshore Wind Auction to Boost 2030 Capacity
UK Seeks Steel Alliance with EU and US to Counter China’s Over-Capacity
UK Struggles to Balance China as Both Strategic Threat and Valued Trading Partner
Argentina’s Markets Surge as Milei’s Party Secures Major Win
British Journalist Sami Hamdi Detained by U.S. Authorities After Visa Revocation Amid Israel-Gaza Commentary
King Charles Unveils UK’s First LGBT+ Armed Forces Memorial at National Memorial Arboretum
At ninety-two and re-elected: Paul Biya secures eighth term in Cameroon amid unrest
Racist Incidents Against UK Nurses Surge by 55%
UK Chancellor Rachel Reeves Cites Shared Concerns With Trump Administration as Foundation for Early US-UK Trade Deal
Essentra plc: A Closer Look at a UK ‘Penny Stock’ Opportunity Amid Market Weakness
U.S. and China Near Deal to Avert Rare-Earth Export Controls Ahead of Trump-Xi Summit
Justin time: Justin Herbert Shields Madison Beer with Impressive Reflex at Lakers Game
Russia’s President Putin Declares Burevestnik Nuclear Cruise Missile Ready for Deployment
Giuffre’s Memoir Alleges Maxwell Claimed Sexual Act with Clooney
House Republicans Move to Strip NYC Mayoral Front-Runner Zohran Mamdani of U.S. Citizenship
Record-High Spoiled Ballots Signal Voter Discontent in Ireland’s 2025 Presidential Election
Philippines’ Taal Volcano Erupts Overnight with 2.4 km Ash Plume
Albania’s Virtual AI 'Minister' Diella Set to 'Birth' Eighty-Three Digital Assistants for MPs
Tesla Unveils Vision for Optimus V3 as ‘Biggest Product of All Time’, Including Surgical Capabilities
Francis Ford Coppola Auctions Luxury Watches After Self-Financed Film Flop
Convicted Sex Offender Mistakenly Freed by UK Prison Service Arrested in London
United States and China Begin Constructive Trade Negotiations Ahead of Trump–Xi Summit
U.S. Treasury Sanctions Colombia’s President Gustavo Petro over Drug-Trafficking Allegations
Miss USA Crowns Nebraska’s Audrey Eckert Amid Leadership Overhaul
‘I Am Not Done’: Kamala Harris Signals Possible 2028 White House Run
NBA Faces Integrity Crisis After Mass Arrests in Gambling Scandal
Swift Heist at the Louvre Sees Eight French Crown Jewels Stolen in Under Seven Minutes
U.S. Halts Trade Talks with Canada After Ontario Ad Using Reagan Voice Triggers Diplomatic Fallout
Microsoft AI CEO: ‘We’re making an AI that you can trust your kids to use’ — but can Microsoft rebuild its own trust before fixing the industry’s?
×