UK to release budget plan and OBR forecast on October 31 – business live | Company

The morning was busy with:

But despite this two-pronged approach, government bond prices are weaker and the pound is little changed.

Susanna Streetsenior investment and market analyst at Hargreaves Lansdownsaid:

Clearly there is still a great deal of skepticism about the government’s plans even as Kwasi Kwarteng prepares to head to the International Monetary Fund’s annual conference where his policies will be subject to further scrutiny.

All eyes will be on the independent assessment of its spending plans, and the risk is that if the numbers don’t add up, markets could scare off again on Halloween.

This is Professor Paul Krugman, who won the 2008 Nobel Prize in Economics, on this year’s winners:

Just now: A former top US central banker has won a slice of the biggest prize in economics.

US-based economists Well Bernanke, Douglas diamond and Philip Dybvig received the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, for their research on banks and financial crises.

They will split 10 million Swedish crowns (£800,000).

diamond and Dybvig were recognized for their work on the vulnerability of banks to rumors of their impending collapse.

The Royal Swedish Academy of Sciences states:

If a large number of savers simultaneously rush to the bank to withdraw their money, the rumor can become a self-fulfilling prophecy – a bank run occurs and the bank collapses. These dangerous dynamics can be avoided if the government provides deposit insurance and acts as a lender of last resort to banks.

Ben Bernanke shares the prize, for his academic work analyzing the Great Depression of the 1930s, the worst economic crisis in modern history. This expertise helped Bernanke weather the 2008 financial crisis when he headed the US Federal Reserve.

The quote explains:

Among other things, he showed how bank runs were a decisive factor in deepening and prolonging the crisis. When the banks collapsed, valuable borrower information was lost and could not be quickly recreated.

Society’s ability to channel savings into productive investments has been severely diminished.

The pound recovered some of its earlier losses, after Kwasi Kwarteng brought forward the date of its debt reduction plan.

The British pound is now nearly flat on the day at $1.107.

There is not much financial reaction, as the Chancellor was due to present the medium-term budget plan earlier….

…although there was confusion after he told GB News last week that it would still be November 23.

Kwarteng’s decision to bring forward the medium-term budget plan by more than three weeks follows pressure from MPs, as well as from the financial market.

After forcing a U-turn on scrapping the 45p top tax rate, some Tory MPs also resisted the idea that benefits could only rise with earnings, not rising wages. price.

Earlier this morning, Victoria Pretis, a minister in the Department for Work and Pensions, suggested that Truss was backing down and giving in to demands from Tories across all wings of the party who want benefits to be increased in line with inflation.

This would mean a bigger increase for households in need (because wages don’t keep up with inflation).

In an interview with Sky News, Prentis said:

It is really important that we make sure that we target government resources on the most vulnerable people.

Andrew Sparrow’s Politics Live blog has all the details:

Kwasi Kwarteng say it Treasury Committee in his letter that:

“When I came to power, I received a preliminary analysis from the OBR, but I have since made important policy announcements, including the growth plan.

“It is important that a forecast includes a full and final assessment of the impact of policy measures on the economy and public finances and as such it would not be appropriate to publish the initial analysis provided by the OBR.

“The new forecast date of October 31 will allow the OBR to capture data releases, such as recent revisions to the Quarterly National Accounts and Blue Book.

“This will enable a comprehensive forecasting process to be put in place to a level that meets the legal requirements of the Fiscal Responsibility Charter enacted by Parliament and which will also provide a thorough assessment of the economy and public finances.

“And that will allow time to finalize the medium-term budget plan. In the meantime, the Prime Minister and I met with the OBR’s Fiscal Responsibility Committee on Friday 30 September to discuss the economic and fiscal outlook, and we will continue to work closely together throughout the forecasting process and beyond.

MP Mel Stridepresident of the Treasury Committeewelcomed the decision to bring forward the medium-term budgetary plan to 31 October.

Stride stresses that the Bank of England must set interest rates three days later – if Kwasi Kwarteng calms the markets, then interest rates may not need to climb as fast.

Market turmoil caused by unfunded tax cuts in the mini budget (totalling over £40billion) and the lack of accompanying independent forecasts has put pressure on the Chancellor to act faster to determine how the government would pay for the plan, and what their long-term impact would be.

BREAKING: Kwasi Kwarteng has brought forward the date of its medium-term fiscal plan to October 31, in which it will outline the government’s debt reduction plans.

The Chancellor announced the change in a letter to Parliament’s Treasury Select Committee.

The independent economic forecast from the Office for Budget Responsibility will also be released that day.

The medium-term plan was scheduled for November 23, but Kwarteng faced increasing pressure to present his plan earlier.

Eurozone investor sentiment fell for the third month in a row, to levels that signal a deep recession.

The Sentix index of euro zone confidence fell to -38.3 points this month, from -31.8 in September, the weakest since May 2020, when the pandemic began.

The Sentix Expectations Index fell to -41.0 from -37.0, hitting its lowest value since December 2008, during the financial crisis.

Sentix General director Manfred Hubner said:

At the beginning of October, the sentix economic indices signal an unchanged difficult economic situation – in Europe, but also globally. At -38.3 points, the global index for the euro zone sank to its lowest level since May 2020.

The lingering uncertainties about the winter gas and energy situation have not diminished due to the attack on the Nordstream pipelines. In addition to economic concerns, there is now also a growing likelihood of an escalation of the military conflict in Ukraine. Overall, there is little reason for hope. Only China seems to be stabilizing somewhat at present.

With the strengthening of the dollar, the pound fell to its lowest level since the end of September.

The pound is down 0.5% at $1.103, below its pre-mini budget levels (but still above the all-time high of $1.035 set two weeks ago).

The Russian ruble hit a three-month low as fears grow of an escalation in the war in Ukraine following the attack on Kyiv this morning.

The ruble fell to 63 rubles to the US dollar for the first time since early July, before recovering slightly.

Russian shares also fell, as geopolitical tensions rise, exacerbated by the fact that shares of energy giant Gazprom begin trading ex-dividend. Dollar denominations RTS the index fell by 6%, while the ruble index MOEX is down 4%.

The sell-off in UK government bonds is accelerating, with the 30-year gilt now above 4.5%, up 16 basis points (0.16 percentage points) today.