Yahoo Finance BoE intervention ‘stopped Sterling spiral’ as Fitch cuts credit rating
A ratings agency has downgraded the UK’s credit rating following the chancellor’s widely criticised “mini-Buget”.
Fitch lowered the outlook for its credit rating for British government debt to “negative" from “stable" on Wednesday.
It comes days after a similar move from rival Standard & Poor’s following Kwasi Kwarteng’s financial statement to MPs in the Commons on 23 September.
At the end of last month Moody’s, another ratings agency, criticised the UK government over its unfunded tax cuts.
In a stinging rebuke to Mr Kwarteng’s plans, Fitch said: “The large and unfunded fiscal package announced as part of the new government’s growth plan could lead to a significant increase in fiscal deficits over the medium term.”
Meanwhile, the Bank of England has said that its intervention last month in the gilt market prevented a “self-reinforcing spiral” which could have wiped out the value of a large number of funds held by pension companies.
The Bank said in a statement on Thursday: “Once the purchase programme is complete, the operation will be unwound in a smooth and orderly fashion once risks to market functioning are judged by the Bank to have subsided.”
Key Points
Fitch downgrades UK credit rating
BoE says intervention prevented further market turmoil
Chancellor to meet with bank chiefs over mortgage market chaos
Two-year fixed mortgages soar to over 6%
Pound remains at 1.13 against the dollar
13:19 , Matt Mathers
We’re finishing up our coverage of the markets for today.
Thanks for reading and have a good afternoon.
Join us again soon for all the latest updates following the chancellor’s “mini-Budget” last month.
Good morning
11:35 , Matt Mathers
Good morning and welcome to The Independent’s rolling coverage of the markets and the pound, following the government’s “mini-Budget”.
Credit rating agency Fitch has criticised Kwasi Kwarteng’s unfunded spending plans and downgraded the outlook for the UK’s credit rating.
And the Bank of England said its intervention intervention last month in the gilt market prevented a “self-reinforcing spiral”.
Fitch rebukes chancellor as it downgrades credit outlook
11:39 , Matt Mathers
A ratings agency has downgraded the UK’s credit rating following the chancellor’s widely criticised “mini-Buget”.
Fitch lowered the outlook for its credit rating for British government debt to “negative” from “stable” on Wednesday.
A Fitch statement said: “The large and unfunded fiscal package announced as part of the new government’s growth plan could lead to a significant increase in fiscal deficits over the medium term.”
Bank of England intervention prevented destructive ‘spiral’ after mini-Budget
11:44 , Matt Mathers
Andrew Woodcock, our politics editor, has more on the Bank of England story.
In a letter to the House of Commons Treasury Committee setting out the thinking behind the dramatic 28 September move to intevene in the gilt market, the Bank’s deputy governor for financial stability Sir Jon Cunliffe said that soaring prices could have triggered “widespread financial instability”.
Full report here:
Bank of England intervention prevented destructive ‘spiral’ after mini-Budget
Two-year fixed mortgages soar to over 6%
11:49 , Matt Mathers
The interest rate on two-year fix-rate mortgages rose to more than 6 per cent yesterday.
It is their highest level since the financial crash in 2008 and the hike came as Liz Truss, the prime minister, delivered a speech to her party conference in Birmingham.
Anyone taking a new mortgage faces spending 25 per cent of household income on their mortgage, according to analysis of Bank of England data by researcher BuiltPlace.
Chancellor to hold talks with bank chiefs amid mortgage rate surge
11:51 , Matt Mathers
The chancellor was to hold talks with the UK’s banks and building societies on Thursday morning amid turmoil in the mortgage sector sparked by the mini-budget market chaos.
Kwasi Kwarteng was expected to sit down with senior executives from high street lenders and the largest challenger banks ahead of his upcoming plans to loosen regulation in the financial services sector.
Anna Wise reports:
Chancellor to hold talks with bank chiefs amid mortgage rate surge
Pound to dollar: Why is sterling so weak?
11:56 , Matt Mathers
Britain’s pound weakened against the dollar on Wednesday, ending a six-day rally but avoiding recent lows.
The pound slipped from 1.15 on Tuesday to 1.13 on Wednesday and remained there on Thursday morning.
My colleague Holly Bancroft reports on why the pound is so weak:
Britons face £500 hike in mortgage payments due to ‘kamikaze’ budget, Labour warns
12:25 , Matt Mathers
Sir Keir Starmer has called on Liz Truss and chancellor Kwasi Kwarteng to reverse their “kamikaze” mini-Budget as he warned families face “eye-watering” mortgage increases.
An average UK buyer coming off a two-year fixed mortgage could experience a £498 monthly hike if interest rates hit 6 per cent, according to Labour analysis.
Our politics correspondent Adam Forrest reports:
£500 hike in mortgage payments ahead due to budget, Labour warns
Tesco’s woes illustrate our country’s economic malaise
13:00 , Matt Mathers
The economic raincloud hanging over much of Britain forced the grocer to cut its forecasts, writes James Moore.
Read James’s full piece here:
Tesco’s woes illustrate our country’s economic malaise
Starmer: Government Budget ‘as anti-growth as you can get’
13:15 , Matt Mathers
The government’s mini-Budget was "about as anti-growth as you could possibly be", Sir Keir Starmer said.
Speaking to BBC Radio Manchester and asked about being labelled part of an anti-growth coalition, Sir Keir said: "The kamikaze mini-budget that Liz Truss put in place two weeks ago today has had a devastating impact on the economy."
Referencing the effect on mortgages, the Labour leader said: "That kamikaze mini-budget is about as anti-growth as you could possibly be. It’s destroying of growth."
