UK

Liz Truss to meet head of Britain’s fiscal watchdog amid market chaos

Truss’s government looks to reassure financial markets after days of chaos triggered by planned tax cuts

British prime minister Liz Truss on Thursday defended her tax cuts policy, despite it triggering market turmoil and forcing a Bank of England intervention to prevent 'material risk' to the economy. Photograph: Isabel Infantes/Getty Images
British prime minister Liz Truss on Thursday defended her tax cuts policy, despite it triggering market turmoil and forcing a Bank of England intervention to prevent 'material risk' to the economy. Photograph: Isabel Infantes/Getty Images
Muvija M
William James
Fri Sept 30 2022 - 09:43

British prime minister Liz Truss and her finance minister Kwasi Kwarteng will meet the head of Britain’s independent fiscal watchdog on Friday as the government looks to reassure financial markets after days of chaos triggered by planned tax cuts.

Mr Kwarteng unveiled a string of lower taxes last week in a fiscal statement that was not accompanied by forecasts from Britain’s Office for Budget Responsibility (OBR), and which sent markets into turmoil over investor concern about how the government would pay for the borrowing required for the cuts.

The market turmoil led the Bank of England to intervene with emergency bond-buying to protect pension funds from partial collapse.

[ Liz Truss vows to stick to UK’s tax-cutting plans despite market turmoil ]

Critics, including some in the ruling Conservative Party, say Truss and Kwarteng should have included forecasts from the OBR to reassure markets about where the funding would come from for their proposed £45 billion tax cuts.

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On Friday, they will now meet the OBR’s chair Richard Hughes to discuss the budget forecast process and economic and fiscal developments since March, the treasury said.

A committee of lawmakers in Britain's parliament on Thursday urged Kwarteng to bring forward his budget statement which will include new forecasts by the country's fiscal watchdog.

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“We all want the forecasts to be as quickly as they (OBR) can but also .. you also want them to have the right level of detail,” city minister Andrew Griffith told Sky News.

Kwarteng has said he would announce a “medium-term Fiscal Plan” on November 23rd that will give new forecasts and detail the cost of the borrowing and measures to cut debt. He has asked the OBR to produce a first draft of its next economic forecasts on October 7th.

The OBR said it had offered to produce a forecast to coincide with his first fiscal statement but were not commissioned to do so. — Reuters