The bond market will provide its opinion on Jeremy Hunt’s weekend revision of Prime Minister Liz Truss’ economic plan on Monday, providing an early test of his efforts to stop the crisis of confidence in her.
On Friday, Truss fired Kwasi Kwarteng and appointed Hunt as her new chancellor of the exchequer in an effort to maintain her position in Downing Street just over a month after moving in and regain some credibility for her economic policies.
The mini-budget “went further and faster than markets were expecting,” said Prime Minister Liz Truss. Over the weekend, Jeremy Hunt issued a warning about impending tax increases and budget reductions. Mr Hunt stated that stability and progress were his main priorities. On October 31, he will lay forth the government’s tax and spending priorities.
The UK government made a number of U-turns as it abandoned its tax-cutting initiatives, which caused the pound to rise during the early Asian trading session. In early trading on Monday, the value of the pound increased by about 0.5% to above $1.12.
The actions were taken as the first trading session on the world’s financial markets after the remarks of the new chancellor. Market turbulence was attributed to Mr Kwarteng’s mini-budget announcement on the 23rd of September. A record low of $1.03 was reached for the pound. The cost of UK government bonds likewise plummeted.
At 08:00 BST, the UK government bond market is scheduled to reopen (07:00 GMT). Since the Bank of England discontinued its emergency support on Friday, it will be the first time.
Goldman Sachs has downgraded the UK’s economic growth as a result of recent market volatility and changes in the government’s economic policy. The investment bank downgraded its prediction for the UK’s economic production in 2023 from a 0.4% decline to a 1% decline.
“No government can control the markets. No chancellor should seek to do that,” Hunt told BBC television in an interview broadcast on Sunday. “There is one thing we can do and that’s what I’m going to do, which is to show the markets, the world, indeed people watching at home, that we can properly account for every penny of our tax and spending plans.”
