LONDON, Oct 11 (NNN-XINHUA) – Responding to mounting pressure, the United Kingdom (UK) Treasury, decided yesterday, to bring forward the date of its debt-cutting plan, alongside forecasts for public finances, to Oct 31.
Announcement of the medium-term fiscal plan, with an economic and fiscal forecast, by the independent fiscal watchdog Office for Budget Responsibility (OBR), was originally scheduled for Nov 23, but the government faced huge pressure to act faster, to reassure markets.
Chancellor of the Exchequer, Kwasi Kwarteng, in Sept, unveiled his ambitious plan to cut taxes and boost economic growth, but it has raised severe concern over the country’s fiscal health and dented confidence in its economic future. Following the plan, the British pound tumbled and government borrowing costs soared.
OBR forecasts were not published alongside the Sept fiscal statement, and the government was accused of avoiding scrutiny.
“Given the size of this package, it is all the more remarkable – and concerning – that it was announced without an update” from the OBR, Thomas Pope, Deputy Chief Economist of the think tank Institute for Government, said.
In wake of market turmoil, the Bank of England (BoE) announced temporary purchases of long-dated government bonds, in an emergency move to restore orderly market conditions. Auctions started in late Sept and will take place on each weekday until Oct 14.
In this final week of operations, the central bank has announced additional measures to “support an orderly end of its purchase scheme.” The BoE said yesterday, it was prepared to increase the maximum size of the remaining five auctions, and it will launch a facility to ease liquidity pressures facing the UK’s pension funds.– NNN-XINHUA
