UK Prime Minister Liz Truss and UK Chancellor Quasi Kwarteng.
Dylan Martinez | AFP | Getty Images
LONDON – British Prime Minister Liz Truss and her Finance Minister Kwasi Kwarteng met the UK’s independent economic watchdog, the Office for Budget Responsibility, for talks on Friday.
After Kwarteng presented a “mini-budget” on September 23, the talks were a flurry for UK markets and the economy as the Bank of England intervened as the pound fell to a record low, gilt yields skyrocketed and mortgages soared. The deals are being pulled due to fears that banks will not be able to afford the rates.
Sterling is now back to pre-mini-budget levels, trading around $1.1118 on Friday morning.
The head of the OBR, Richard Hughes, said he had discussed the country’s economic and fiscal outlook with the two ministers, as well as the forecast being prepared for Kwarteng’s “medium-term fiscal plan”.
The first draft of the estimates will be distributed to the Finance Minister on October 7, with a full schedule of estimates to be released next week.
A statement provided by the OBR highlighted the forecast “will, as usual, be based on”. [its] An independent judgment about economic and fiscal prospects and the impact of government policies.”
According to Jagjit Chadha, director of the National Institute of Economic and Social Research, the prime minister and finance minister may now want to refine their latest fiscal plans with experts like the OBR before unveiling them.
“The kind of intervention that they had in mind was not right for the economy right now, and I suspect that they regret not trying to scrutinize their idea before revealing it and revealing it,” Chadha told CNBC.
It is also difficult to say what the outcome of Friday’s meeting will be, but “it is a start,” Chadha said.
“There is now a much more extended process to rebuild the bridges that almost burned down in the last few weeks,” he told CNBC.
The OBR produced a general economic forecast ahead of the mini-budget on September 23, but the UK Treasury decided not to publish it, according to the BBC.
Kwarteng said in an announcement to his fellow MPs that the full budget would be published “by the end of the year” and that a full budget statement was now expected on November 23.
The IMF has since given a scathing verdict on the measures set out in the mini-budget, saying they are “likely to increase inequality” and that the UK government should “consider ways to provide more targeted support and reassess tax measures, particularly those that benefit higher earners”. happens.”
The plans have also been heralded by a number of economists and investors, including Ray Dalio, the founder of Bridgewater, one of the world’s largest hedge funds, who said the proposed measures indicated government “incompetence”.
According to Richard Portes, professor of economics at the London Business School, the UK currently has an “ideological government”.
“Some have called his economics ‘stupid economics’ — I prefer to think of it as ‘faith-based’ economics,” Portes told CNBC.
“I suspect that Richard Hughes [head of the OBR] will be converted,” added Portes.
Conservative support plunges
Recent government activity has caused the British public to lose favor with the incumbent Conservative Party. According to the latest research by YouGov, around 54% of those surveyed would vote for the opposition – the left-wing Labor Party – if a general election were held in the near future.
Labor currently has a 33-point lead over the Conservatives, the highest the party has had in any published poll since the late 1990s, the polling agency said. Meanwhile, the number of voters who want to vote Conservative has fallen to 21%.