Commerce minister: UK budget not to blame for market turmoil

LONDON, Oct 12 (Reuters) – Britain’s business secretary Jacob Rees-Mogg said on Wednesday the government’s “small budget” should not be blamed for the turmoil in bond markets. Accused the IMF of anti-British bias and cast doubt on officials. Data showed the economy was shrinking.

Liz Truss’ remarks have drawn criticism at a time when Liz Truss’s new Conservative government is trying to boost the credibility of international investors and restore confidence in its economic capabilities.

Rees-Mogg, who was appointed by Truss when she took office last month, dismissed criticism in a round of interviews that the government’s announcement of a 45 billion pound ($49.86 billion) tax cut through increased borrowing and undetermined supply sparked a bond market crash. side reform.

Sign up now for free unlimited access to

“It’s mainly caused by interest rate differences, not by fiscal announcements,” he told BBC radio.

Before entering politics, Rees-Mogg, who founded an emerging markets investment firm, was at the forefront of Britain’s departure from the European Union. His appointment to a senior ministerial position under Truss was met with skepticism by some business more

The tax cut fiscal announcement came a day after the Bank of England raised interest rates by less than the U.S. central bank.

Citing this, Rees-Mogg blamed his interviewer for saying the budget had caused the sell-off in UK currency and bonds. His comments went further than other ministers who emphasized global factors.

“I don’t think it is consistent with the BBC’s requirements for impartiality to draw conclusions about causation,” he told the BBC, which is funded by licensing fees. “This is a comment, not a question of fact.”

Senior Bank of England officials have repeatedly said that behind the sharp swings in UK assets are UK-specific factors, including a small Sept. 9 budget. twenty three.

On the day of the fiscal announcement, one Citibank economist in the US described it as “a huge, unfunded gamble for the UK economy”, while others described market volatility as concerns over the UK’s fiscal credibility .

Since then, the Bank of England has had to intervene to stabilize the market after a sharp fall in UK government bonds threatened pension funds with large holdings of long-term gilts.

In response to Rees-Mogg’s comments, BlackRock portfolio manager Rupert Harrison said: “This kind of comment actively undermines the credibility of the government in the eyes of the market, and they all know it’s utter nonsense. “

Harrison served as an adviser to then Conservative Treasurer George Osborne until 2015.

In recent weeks, the International Monetary Fund has taken a rare move to criticize the economic policies of G7 members. Rees-Mogg responded that the IMF was “usually not a friend of this government.”

In Monday’s interview, he also said data from the Office for National Statistics should not be relied upon to show an unexpected contraction in the economy in August, as early readings are usually revised.

($1 = £0.9026)

Sign up now for free unlimited access to

Reporting by William James Edited by Mark Heinrich

Our Standard: The Thomson Reuters Trust Principles.

Source link