London Daily

Focus on the big picture.
Sunday, Mar 15, 2026

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
Prince Harry and Meghan Markle’s Planned Australia Visit Draws Mixed Reaction From Local Communities
Trump Calls on France and UK to Help Safeguard Strait of Hormuz Shipping Route
Boris Johnson Labels Bitcoin a ‘Ponzi Scheme’, Sparking Debate in Crypto World
UK Considers Targeted Aid for Vulnerable Households as Energy Costs Rise
Stellantis Urges Immediate Review of UK Electric Vehicle Sales Targets
Home Office Reverses Course to Allow Some Dual Nationals to Enter UK Using EU Passports
Reform UK Proposes Replacing Top Civil Servants With Officials Aligned to Government Agenda
Netflix Adds Critically Acclaimed ‘Best Film of 2025’ With Perfect Rotten Tomatoes Score
‘The Sums Don’t Add Up’: UK Farmers Hit by Soaring Costs as Iran War Disrupts Global Supplies
Confidential UK Biobank Health Records Found Online After Researchers Accidentally Expose Data
Trump Urges Britain and Allies to Deploy Warships to Safeguard Strait of Hormuz
Trump Urges Britain and Allies to Deploy Warships to Safeguard Strait of Hormuz
Middle East War Highlights Strategic Importance of Strong UK–Ireland Cooperation
Weak Growth Signals UK Economy Was Faltering Even Before Middle East Energy Shock
Marks & Spencer Tops UK Fashion Retail Rankings as Most Considered Brand
United States Launches Trade Investigation Into Allies Over Forced Labour Practices
United States Launches Trade Investigation Into Allies Over Forced Labour Practices
Russia Accuses Britain Over Storm Shadow Strike as London Reaffirms Ukraine’s Right to Self-Defence
Russia Accuses Britain Over Storm Shadow Strike as London Reaffirms Ukraine’s Right to Self-Defence
Royal Navy to Acquire Twenty Uncrewed Surface Vessels for Autonomous Warfare Testing
Russia Summons British and French Envoys After Ukrainian Storm Shadow Strike on Strategic Facility
Starmer Confirms Britain Will Maintain Sanctions on Russia Despite U.S. Policy Shift
UK Moves to Refine AI Definition in Investment Security Reform
UK Economy Stalls in January as Growth Unexpectedly Falls to Zero
Asian Energy Security Tested as Strait of Hormuz Disruption Threatens Oil Supplies
Iran Sets Three Conditions for Ending Regional War as Diplomatic Efforts Intensify
Tesla Secures Approval to Supply Electricity Directly to Homes Across Britain
Prince William Delivers Tribute to Australia’s Naval Alliance Amid Renewed Royal Spotlight on the Country
UK Foreign Secretary Travels to Saudi Arabia to Reinforce Support for Regional Allies
Putin’s ‘Hidden Hand’ May Be Assisting Iran in Conflict With Trump, UK Defence Secretary Warns
UK Sets April Deadline for Tech Platforms to Strengthen Online Protections for Children
Elon Musk Moves Into Britain’s Energy Market as Tesla Wins Licence to Supply Power
UK Watchdog Warns Fuel Retailers Against Profiteering Amid Iran War Price Surge
Report Claims Iran Used UK Charity Network to Expand Influence
United States and United Kingdom Establish Joint Standards for Counter-Drone Technology
Iran May Be Laying Naval Mines in Strait of Hormuz, UK Warns Amid Escalating Gulf Tensions
US Deploys Bunker-Buster Bombs to UK Airbase as Iran Conflict Intensifies
British Troops in Iraq Intercept Iranian Drones Targeting Coalition Base
Release of Mandelson Files Raises Tensions as UK Seeks Stable Relations With Donald Trump
UK Documents Reveal Starmer Was Warned About Mandelson’s Epstein Links Before Ambassador Appointment
Nearly Five Hundred UK Mortgage Deals Withdrawn in Two Days as Market Volatility Forces Lenders to Reprice
Three Cargo Ships Hit Near Iran as Attacks Spread to Strategic Strait of Hormuz
Why British Police Repeatedly Declined to Investigate Jeffrey Epstein’s UK Links
UK Parliament Ends Hereditary Seats in House of Lords, Closing Chapter on Centuries of Aristocratic Lawmaking
EU and UK Urge Israel to Act Against Rising West Bank Settler Violence Amid Regional Tensions
US Senator John Kennedy Says Keir Starmer Should Not Be Trusted for Military Advice Amid Iran War Debate
UK High Court Rejects Attempt to Revive Terrorism Charge Against Kneecap Rapper
Revolut Secures Full UK Banking Licence After Multi-Year Regulatory Wait
Kentucky’s Bench Boost Powers Wildcats Past LSU in SEC Tournament Opener
British Couple Die After Being Pulled From Water at Australian Beach During Family Visit
×