By Daniel Thomas
Business reporter, BBC News
The chancellor’s decision to bring forward the date of his plan to balance the government’s finances failed to reassure markets on Monday.
Government borrowing costs rose sharply after Kwasi Kwarteng said he would fast-track his plan to 31 October.
The plan will set out how he will fund tax cuts and reduce debt after his mini-budget sparked market turmoil.
An independent forecast of the UK economy’s prospects will be published at the same time.
In the wake of the September mini-budget, the pound slumped to a record low, government borrowing costs surged and the Bank of England was forced to step in and take emergency action after the dramatic market movements put some pension funds at risk of collapse.
The volatility eased but on Monday the yields – or effective interest rates – on UK government bonds were almost at the levels seen at the height of the market turmoil.
Further efforts by the Bank of England to calm markets, along with the appointment of an experienced civil servant as Permanent Secretary to the Treasury also seemed to fall short.
Former Treasury chief Lord Macpherson warned the government that there could be an even tougher response from the financial markets in the coming weeks if the chancellor could not show his sums added up.
“Unless the government can restore economic credibility, the market response in the weeks ahead could be a whole lot worse than we’ve seen so far,” he told the House of Lords.
‘Critical to millions’
Mr Kwarteng had initially said he would wait for 23 November to give details of his economic plan but faced mounting pressure from his MPs to change course.
The new date means Mr Kwarteng’s fiscal statement will be published before the Bank of England announces its latest decision on interest rates on 3 November.
The Bank’s Monetary Policy Committee (MPC) is widely expected to raise interest rates for the eighth time since last December with many economists forecasting a sharper rise than previous increases.
But Mel Stride, chairman of the Treasury Select Committee, tweeted that he hoped Mr Kwarteng’s decision to release the report earlier would result in a smaller rate rise.
He tweeted this would be “critical to millions of mortgage holders”,
Noting that that the plan will be published on Hallowe’en, Labour deputy leader Angela Rayner tweeted: “Trick or cheat? The Tory horror show rattles on.”
The OBR, the independent budget watchdog, will now publish a report alongside Mr Kwarteng’s statement at the end of October. Its forecasts will give an indication of the health of the nation’s finances.
