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☆ UK market meltdown? Nothing to see here, minister says
▼ + stars: | 2022-09-24 | by ( ) www.reuters.com time to read: +2 min

Chief Secretary to the Treasury Chris Philp walks outside Treasury building, in London, Britain September 7, 2022. REUTERS/Hannah MckayLONDON, Sept 24 (Reuters) - Britain's deputy finance minister on Saturday played down a historic collapse in the pound and government bonds in response to the country's new economic growth plan, which sent international investors heading for the exit. The pound slumped 3.6% on Friday below $1.09, a new 37-year low against the dollar, while gilts suffered their worst day in decades as the market digested finance minister Kwasi Kwarteng's announcement of a borrowing-funded drive for growth. "Let's be clear, the interest rates payable on government gilts is about the same in the United Kingdom now today as it is in the United States," Chris Philp, Britain's deputy finance minister, told Sky News when asked about the market moves. "(The reason) we're doing this isn't for intraday moves in the currency market, Philp said.

☆ UK market meltdown? Nothing to see here, Treasury minister says
▼ + stars: | 2022-09-24 | by ( ) www.reuters.com time to read: +2 min

Chief Secretary to the Treasury Chris Philp walks outside Treasury building, in London, Britain September 7, 2022. REUTERS/Hannah MckayLONDON, Sept 24 (Reuters) - Britain's deputy finance minister on Saturday played down a historic collapse in the pound and government bonds in response to the country's new economic growth plan, which sent international investors heading for the exit. The pound slumped 3.6% on Friday below $1.09, a new 37-year low against the dollar, while gilts suffered their worst day in decades as the market digested finance minister Kwasi Kwarteng's announcement of a borrowing-funded drive for growth. "(The reason) we're doing this isn't for intraday moves in the currency market, Philp said. Register now for FREE unlimited access to Reuters.com RegisterReporting by Andy Bruce Editing by Frances KerryOur Standards: The Thomson Reuters Trust Principles.

☆ U.K.’s Sweeping Tax Cuts Send Pound Tumbling, Yields Higher
▼ + stars: | 2022-09-23 | by ( Max Colchester | ) www.wsj.com time to read: 1 min

LONDON—The British government unveiled the biggest tax cuts since the early 1970s in a bold bet to jolt the U.K.’s inflation-stricken economy into growth, prompting a slide in the pound and a jump in government bond yields. In one of the largest shifts in British economic policy in decades, U.K. Chancellor of the Exchequer Kwasi Kwarteng said the government would cut payroll taxes, freeze corporation tax, ditch a cap on banker bonuses and spend billions to subsidize energy bills over the next two years.

☆ Morning Bid: After manic week, TGIF
▼ + stars: | 2022-09-23 | by ( ) www.reuters.com time to read: +2 min

Guest walk on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 22, 2022. REUTERS/Brendan McDermidRegister now for FREE unlimited access to Reuters.com RegisterA look at the day ahead in European and global markets from Anshuman DagaFriday is shaping up as a slow day. Equity markets are still licking their wounds, U.S. bond yields are at 11-year highs and the dollar is hovering near a two-decade peak. Register now for FREE unlimited access to Reuters.com RegisterStill, investors have probably had enough this week, with the Fed raising rates by 75 basis points as expected but jolting markets with a sobering outlook. read moreA host of central banks including the UK, Swiss and Norwegian raised interest rates this week, providing no signs that borrowing costs are nearing a peak.

☆ Britain cuts stamp duty tax on property purchases
▼ + stars: | 2022-09-23 | by ( ) www.reuters.com time to read: +2 min

Register now for FREE unlimited access to Reuters.com RegisterNew British Chancellor of the Exchequer Kwasi Kwarteng walks outside Number 10 Downing Street, in London, Britain September 6, 2022. "The steps we've taken today mean 200,000 more people will be taken out of paying stamp duty altogether," he said in a tax-cutting mini-budget designed to spur economic growth. Register now for FREE unlimited access to Reuters.com RegisterStamp duty, payable in England and Northern Ireland, is a graduated tax, which rises in steps to 12% on the portion of the property price above 1.5 million pounds. There was a stamp duty holiday during the COVID-19 pandemic, which initially increased the nil band to 500,000 pounds, stimulating a market which rose to record levels. ($1 = 0.8937 pounds)Register now for FREE unlimited access to Reuters.com RegisterReporting by Paul Sandle, David Milliken and Kylie MacLellan; editing by Alistair SmoutOur Standards: The Thomson Reuters Trust Principles.

☆ Breakingviews: UK growth requires an even less popular Liz Truss
▼ + stars: | 2022-09-23 | by ( Aimee Donnellan | ) www.reuters.com time to read: +4 min

LONDON, Sept 23 (Reuters Breakingviews) - In her early days as prime minister, Liz Truss has had two mantras. As expected, Kwarteng reversed a planned hike in national insurance rates, costing around 17 billion pounds per year. The whole package will cost 45 billion pounds by 2027, while the government is also spending 60 billion pounds capping household and business energy bills. Support for household energy bills announced by Truss will cost 60 billion pounds for the next six months, Kwarteng said. Tax cuts would cost a further 45 billion pounds by 2026-2027, according to UK finance ministry costings.

☆ UK's mini budget slashes taxes and borrows heavily as recession hits
▼ + stars: | 2022-09-23 | by ( Anna Cooban | ) edition.cnn.com time to read: +4 min

London CNN Business —A huge gamble by the UK government aimed at rescuing the economy from recession and boosting long-term growth sent the pound plunging on Friday. Paul Johnson, director of the Institute for Fiscal Studies, an independent think tank, called the government’s plans “extraordinary.”“It’s half a century since we’ve seen tax cuts announced on this scale,” he said in a tweet. The pound sank almost 2% to $1.10 on Friday after Kwarteng’s announcement to its lowest level since 1985. The measures come a day after the Bank of England warned that the country was already likely in a recession. ‘Unfunded giveaways’News of the heavy additional government borrowing rattled investors already concerned that the country is spending beyond its means.

☆ UK's Kwarteng to scrap top rate of income tax, cut basic rate from April
▼ + stars: | 2022-09-23 | by ( ) www.reuters.com time to read: +1 min

Britain's Chancellor of the Exchequer Kwasi Kwarteng steps outside Downing Street in London, Britain, September 23, 2022. Kwarteng said from April 2023 Britain would have a single higher rate of income tax of 40 per cent, scrapping an additional rate of 45% on income over 150,000 pounds ($168,000). He also said he would cut the basic rate of income tax to 19 pence in April 2023, one year earlier than expected. "That means a tax cut for over 31 million people in just a few months' time," he told parliament. "That means we will have one of the most competitive and pro-growth income tax systems in the world."

☆ The UK pound slides to 37-year low against the dollar as the new British government's mini-budget spurs worries about further inflationary pressures
▼ + stars: | 2022-09-23 | by ( Carla Mozée | ) www.businessinsider.com time to read: +3 min

The UK pound hits a fresh 37-year low against the US dollar on Friday. Pound sterling fell below $1.09 as the UK's new government outlined tax cuts and other moves to bolster economic growth. The pound fell below $1.10 for the first time in 37 years, tanking as much as 3.2% as the currency pair fell to $1.0899. The inflation rate of 9.9% is running at a near four-decade high. UK government bond prices fell, sending yields higher, and the FTSE 100 benchmark equity index lost about 2% on Friday.

☆ UK downturn deepens, raising recession risk -flash PMI
▼ + stars: | 2022-09-23 | by ( ) www.reuters.com time to read: +3 min

Released just as finance minister Kwasi Kwarteng was due to flesh out the economic agenda of new Prime Minister Liz Truss, the S&P Global/CIPS flash Composite Purchasing Managers' Index (PMI) fell to 48.4 from 49.6 in August. It marked the lowest reading since the COVID-19 lockdown of January last year. The PMI for the services sector fell to 49.2 in September from 50.9 in August, the weakest reading since January 2021. While the manufacturing PMI rose to 48.5 from 47.3, much of the improvement reflected a worsening supply chain performance, which in normal times reflects shortages due to strong demand but not this time. Despite the pound falling to 37-year lows against the dollar, export orders contracted in both the manufacturing and service sectors, S&P Global said.

REUTERS/Toby MelvilleLONDON, Sept 23 (Reuters) - Britain's new economic agenda of tax cuts and high spending do not represent a gamble because improved economic growth will pay for it, cabinet minister Simon Clarke said ahead of a major fiscal announcement on Friday. Close to 200 billion pounds ($225 billion) of tax cuts, energy subsidies and planning reforms are due to be announced by new finance minister Kwasi Kwarteng as part of Prime Minister Liz Truss's bid to spur growth. "The critical thing is we need to get the economy growing so that, frankly, the economic growth trajectory outstrips that of our debt." Truss has aspirations to double the long-run rate of British annual economic growth to 2.5%. Clarke said the metrics of success would be in improved economic growth.

☆ Markets hate Liz Truss’ plan for the UK. Just look at these charts
▼ + stars: | 2022-09-23 | by ( Julia Horowitz | ) edition.cnn.com time to read: +3 min

London CNN Business —When the UK government, led by new Prime Minister Liz Truss, unveiled its plan to rescue the British economy on Friday, the reaction from investors was instantaneous: They hated it. UK stocks, as measured by the FTSE 100 (UKX) in London, hit their lowest level since March. The Bank of England on Thursday pushed its key rate to its highest level since 2008. “It makes me very sorry to say, but I think the UK is behaving a bit like an emerging market turning itself into a submerging market,” Summers said. “We think the market may be underpricing the chances of parity.”

British Prime Minister Liz Truss and Chancellor of the Exchequer Kwasi Kwarteng visit Berkeley Modular, in Northfleet, Kent, Britain, September 23, 2022. The pound crashed below $1.09 for the first time since 1985 and British government bonds suffered the biggest daily fall in decades. "I've rarely seen an economic policy that is as uniformly panned by economic experts and financial markets," said Harvard professor Jason Furman, former chair of the U.S. Council of Economic Advisers during Barack Obama's presidency. Britain's Institute for Fiscal Studies compared Kwarteng's statement to a budget in 1972 that similarly sought to double Britain's rate of economic growth, but is widely remembered as a disaster for its inflationary effect. Furman said Truss might also have no choice but to undo some of her plans if Britain's debt problems start to spiral because of higher interest rates.

☆ Euro zone likely entering recession as price rises hit demand -PMI
▼ + stars: | 2022-09-23 | by ( Jonathan Cable | ) www.reuters.com time to read: +4 min

Register now for FREE unlimited access to Reuters.com Register"The third decline in a row for the euro zone PMI indicates business activity has been contracting throughout the quarter. A reuters poll earlier this month gave a 60% chance of a recession in the euro zone within a year. read morePRICE PRESSURESOverall demand in the euro zone fell to its lowest since November 2020, when the continent was suffering a second wave of COVID-19 infections. The new business PMI fell to 46.0 from 46.9. The euro zone services PMI fell to 48.9 from 49.8, its second month sub-50 and the lowest reading since February 2021.

☆ Gamble or going for growth? UK slashes taxes and borrows heavily as recession hits
▼ + stars: | 2022-09-23 | by ( Anna Cooban | Cnn Business | ) edition.cnn.com time to read: +1 min

London (CNN Business) The UK government on Friday unveiled its bid to rescue the economy from recession with a plan that involves slashing taxes, removing a cap on banker bonuses and a big increase in borrowing. Announcing the plan, Finance Minister Kwasi Kwarteng said the government needed a "new approach for a new era, focused on growth." He said the government would cut personal income taxes and cancel plans to raise business taxes next spring, moves that are estimated to wipe £30 billion ($34 billion) off government revenue. At the same time, Kwarteng said the government would press ahead with plans to subsidize the energy bills for millions of households and businesses — estimated by some analysts to cost around £150 billion ($168 billion) — by increasing borrowing. Kwarteng said he expects the energy support package would cost £60 billion ($67 billion) for the six months from October.

☆ UK Chancellor denies that government is set to clash with the BoE -FT
▼ + stars: | 2022-09-23 | by ( ) www.reuters.com time to read: +1 min

The Chancellor of the Exchequer Kwasi Kwarteng speaks during the Government's Growth Plan statement at the House of Commons, in London, Britain, September 23, 2022. In the interview, after laying out his mini-budget, Kwarteng said: "There have been two exogenous shocks: the COVID pandemic and (Russian President Vladimir) Putin’s invasion of Ukraine. "On the monetary side it's entirely reasonable for the bank to do what it classically does. We would not have done our duty had we not intervened in a fiscally liberal way to the COVID-19 pandemic and Putin's invasion of Ukraine." read moreRegister now for FREE unlimited access to Reuters.com RegisterReporting by Muvija; editing by Jonathan OatisOur Standards: The Thomson Reuters Trust Principles.

☆ Reactions: Britain's finance minister unveils "mini budget"
▼ + stars: | 2022-09-23 | by ( ) www.reuters.com time to read: +5 min

Britain's blue-chip stocks (.FTSE)remained mired in the red, in line with a broader equity-market decline. FOREX: Sterling extended losses, falling 1.9% on the day to around $1.1047, having hit a new 37-year low earlier on. British homebuilders and household goods makers hit session highs, buoyed by the prospect of consumers getting tax breaks. The tax-cutting budget and ‘go for broke’ growth aims are unlikely to change the longer-term bearish GBP trend." If you get more fiscal stimulus and less monetary stimulus, that’s something that’s buoyant for the currency.

British Pound Sterling and U.S. Dollar notes are seen in this June 22, 2017 illustration photo. Income tax cuts, a drop in property taxes, tax-free shopping for overseas visitors and the scrapping of a planned corporation tax rise are all aimed by the government at giving households and businesses a boost. It was last down 1.36% against the dollar at 1.1106 , a new low since 1985. The FTSE 100 (.FTSE) dropped 1.3%, hitting its weakest level since July 15, but shares in UK homebuilders jumped after Kwarteng announced changes to property stamp duty. Register now for FREE unlimited access to Reuters.com RegisterReporting by Alun John Editing by Alexander Smith and Frances KerryOur Standards: The Thomson Reuters Trust Principles.

People relax in the sun of the bank the River Thames, with the The City of London financial district in the distance, in London, Britain, June 16, 2022. The CityUK, which promotes UK financial services abroad, said Britain must make a competitive and compelling offer to lift growth, but there is no magic bullet. DEREGULATION PUSHThe City is largely locked out of the EU since Brexit and financial services were excluded from the UK's trade deal with the bloc. Kwarteng said the financial services sector will be at the heart of the government's programme to drive growth in the economy. "To reaffirm the UK's status as the world's financial services centre, I will set out an ambitious package of regulatory reforms later in the autumn," Kwarteng said.

☆ Britain pursues 'trickle-down economics' despite scorn from Biden. And the stakes are sky-high
▼ + stars: | 2022-09-23 | by ( Karen Gilchrist | ) www.cnbc.com time to read: +5 min

British Prime Minister Liz Truss and U.S. President Joe Biden formally met for the first time at the United Nations General Assembly in New York City, following clashes in economic policy between the two leaders. Biden, in a tweet Tuesday, said he was "sick and tired of trickle-down economics," adding "it has never worked." Liz Truss U.K. prime ministerCritics, including Britain's opposition Labour party, have argued that such measures disproportionately benefit the wealthy. Questions have also been raised over how the policies will be funded, with tax cuts expected to lead to higher borrowing. Truss has argued that resultant growth will bring in more revenue which will cover those borrowing costs.

REUTERS/Peter NichollsLONDON, Sept 23 (Reuters) - Britain's main opposition Labour Party criticised the Conservative government's economic plans on Friday, describing the new prime minister and finance minister as "two desperate gamblers in a casino" who had run out of ideas. "The prime minister and chancellor (finance minister) are like two desperate gamblers in a casino chasing a losing run," she told parliament. Taking aim at the lack of independent scrutiny of the government's plans, Reeves described Kwarteng's statement as "a budget without figures, a menu without prices". While Labour and other opposition lawmakers were biting in their criticism of the government's fiscal statement, supporters of Britain's new government hailed its radicalism. Some said previous Conservative governments, in power for 12 years with five of them in coalition with the Liberal Democrats, should have adopted the policies a long time ago.

☆ New UK finance minister Kwarteng seeks end to 'cycle of stagnation'
▼ + stars: | 2022-09-23 | by ( David Milliken | ) www.reuters.com time to read: +4 min

Paul Johnson, director of the Institute for Fiscal Studies (IFS) think tank, said Truss and Kwarteng's tax cuts could be the largest since 1988, and risked putting Britain's public debt on an unsustainable path. The IFS, together with U.S. bank Citi, estimate household energy subsidies will cost about 120 billion pounds over two years, while six months of business energy subsidies will cost 40 billion pounds. read moreThese are a one-off, and the bigger concern for the IFS is around 30 billion pounds of permanent tax cuts - starting with 14 billion pounds in reduced payroll taxes, confirmed on Thursday, and 15 billion pounds of cuts to corporation tax. For Kwarteng, tax cuts and deregulation are a way to end what he calls "a cycle of stagnation" that led to tax rates being on course for their highest level since the 1940s. "We will liberalise planning rules in specified agreed sites, releasing land and accelerating development," Kwarteng is expected to say.

☆ FTSE slides as UK's mini budget fails to soothe recession worries
▼ + stars: | 2022-09-23 | by ( Sruthi Shankar | ) www.reuters.com time to read: +3 min

The London Stock Exchange Group offices are seen in the City of London, Britain, December 29, 2017. read moreThe internationally focussed FTSE 100 (.FTSE) extended losses, falling 1.6% to its lowest since July 15, while the domestically focussed FTSE 250 index (.FTMC) dropped 1.1% to hit near two-year lows. It is among UK's worst performing sectors this year as rising rates sparked worries about affordability. read moreOil (.FTNMX601010) and mining (.FTNMX551020) majors were the biggest drags on the FTSE 100 as commodity prices weakened against a strong dollar. read moreSmiths Group (SMIN.L) rose 4.1% after the industrial technology group provided upbeat full-year 2023 forecast.

☆ UK targeting medium term growth of 2.5% - finance minister
▼ + stars: | 2022-09-23 | by ( ) www.reuters.com time to read: +1 min

Register now for FREE unlimited access to Reuters.com RegisterFILE PHOTO: Workers pass by a sales person as they walk towards the City of London financial district, during the morning rush hour in London, Britain, September 8, 2021. REUTERS/Toby Melville/File Photo/File PhotoLONDON, Sept 23 (Reuters) - British finance minister Kwasi Kwarteng said on Friday he was targeting economic growth of 2.5% over the medium term. Our aim over the medium term is to reach a trend rate of growth of 2.5%," he said during a fiscal statement to parliament. The fiscal statement was not accompanied by independent growth forecasts. Register now for FREE unlimited access to Reuters.com RegisterReporting by David Milliken and William James, editing by Elizabeth PiperOur Standards: The Thomson Reuters Trust Principles.

☆ Citi says sterling-dollar parity is possible as UK risks currency crisis
▼ + stars: | 2022-09-23 | by ( Jenni Reid | ) www.cnbc.com time to read: +1 min

A trader, center, wears a Citigroup jacket while working on the floor of the New York Stock Exchange. LONDON — The U.K. risks a currency crisis that could see sterling reach parity with the dollar, according to analysts at Citi. British economic growth has been sluggish in recent years, and the Bank of England on Thursday said it was likely in a recession. By 4 p.m. London time Friday, the pound had lost more than 3% against the dollar, marking a fresh 37-year low of $1.0915. It was last at this level briefly in 1985, when it weakened on the back of interest rate hikes in the U.S.

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