London Daily

Focus on the big picture.
Saturday, Jun 27, 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
Thames Water and Energy Operators Warn of Peak Demand Risks During UK Heatwave
Government Conference Highlights Push for Evidence-Led Policy Across UK Public Sector
Insolvency Service Reports Improved Confidence in UK Insolvency System
Security Industry Authority Finds Widespread Safety Failures in UK Night-Time Economy
Nigel Farage Expands Anti-WHO Campaign Into United States With New Lobbying Structure
Home Secretary Seema Mahmood Unveils New Safe Routes Plan for Asylum Seekers
UK Government Warns of Peak Electricity and Water Pressure Amid Ongoing Heatwave
New Nuclear Plant in Wales Named Gwyndod Power Station as Energy Strategy Advances
UK Announces First Major Hydropower Projects in Four Decades to Expand Renewable Capacity
Thirteen Men Charged in Major UK Sexual Abuse Case as Investigation Continues
UK Launches Cross-Sector Climate Security Taskforce Linking Environment and National Security
UN Secretary-General António Guterres Calls for Urgent Global Methane Emissions Cuts in London
World Bank Approves $1 Billion UK-Backed Financing Package for Ukraine Recovery
UK Pledges Emergency Aid and Rescue Team Deployment to Earthquake-Hit Venezuela
Bank of England Holds Interest Rates at 3.75 Percent for Fourth Straight Meeting
Record-Breaking Heatwave Puts Strain on UK Health Services and Energy Networks
London Ambulance Service Sees Record Emergency Demand as Heatwave Intensifies
British Chambers of Commerce Warns of Prolonged Weak Investment Climate Through 2027
Bank of England Holds Interest Rates as Inflation Risks Persist
UK Construction Sector Faces One Percent Contraction Amid Cost and Investment Pressures
Former DUP Leader Sir Jeffrey Donaldson Convicted of Sexual Offences
Church of England Appoints Dr Linsay Cunningham to Lead Faith and Public Life Division
UK Armed Forces Day Marked Nationwide With Events From Aberdeen to the Scilly Isles
Rising Tensions in Edinburgh Prompt Joint Warning From Scottish Local Government Leaders
UK Construction Sector Forecast to Contract One Percent in 2026 on Cost Pressures
UK Parliament Backs 87 Percent Emissions Cut as Government Deepens Electrification Drive
British Chambers of Commerce Forecast Weak UK Growth as Investment and Demand Slow
Bank of England Holds Interest Rates at 3.75 Percent Amid Energy and Inflation Uncertainty
London Ambulance Service Reports Record Surge in Life-Threatening Emergency Calls During Heatwave
UK Parliament Approves Legally Binding 87 Percent Emissions Cut Target by 2040
United Kingdom Records Third Consecutive Day of Record June Heat as Europe Faces Worsening Heatwave
Robert Jenrick Defends £5 Million Donation to Nigel Farage Amid Political Scrutiny
Plymouth Museum The Box Wins 2026 Art Fund Museum of the Year Award
UK Government Faces Backlash Over Plans to Use Former Military Sites for Asylum Accommodation
Labour Party Faces Pressure Over Cabinet Stability as Senior Figures Clash on Policy Direction
Heathrow Airport Forecasts Passenger Decline in 2026 as Costs and Climate Disruption Mount
UK Energy Regulator Approves Expansion of Long-Duration Storage to Boost Power System Resilience
Crown Estate Reports Third Consecutive Year of £1 Billion Profit as Debate Over Royal Finances Intensifies
Teenager Charged With Murder in Wales Following Death of 14-Year-Old Boy
Nottingham University Hospitals Maternity Failures Trigger Calls for Public Inquiry Into Patient Safety
EasyJet Rejects £4.9 Billion Takeover Offer From Castlelake but Keeps Door Open for Further Talks
Record Heatwave Triggers UK Transport and Infrastructure Strain as Heathrow Revises Passenger Forecast Downward
Ofgem Approves Sixteen Long-Duration Energy Storage Projects to Strengthen UK Grid Stability
Labour Government Faces Internal Tensions Over Cabinet Decisions and Net Zero Policy Direction
British Food and Drink Exports Fall to Decade Low Amid Trade Friction and US Tariffs
Great Britain Grid Operator Spends £10 Million to Stabilize Electricity Supply During Heatwave Demand Surge
UK Parliament Committee Calls for Urgent National Adaptation Strategy as Extreme Heat Strains Public Infrastructure
Record-Breaking Heatwave Pushes England’s National Health Service to Critical Incident Status as Hospitals Struggle With Surge in Emergencies
UK Government Launches Review of Voluntary National Insurance Contributions System
UK Planning Inspectorate Reports Key Infrastructure and Planning Milestones in Annual Review
×