Truss is under great pressure to rethink his economic policies as opinion polls show support for his government plummeting.
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LONDON – UK bonds fell on Friday after several reports that Prime Minister Liz Truss will hold a press conference later in the day.
It comes amid growing speculation that Truss is considering a U-turn on parts of his government’s market-rocking tax cuts.
Finance Minister Kwasi Kwarteng told reporters on Thursday that he would return from the US ahead of schedule this week, without giving further details. Several reports suggested that Truss and Kvarteng were likely to revise some economic plans on Friday.
Kwarteng pulled out of international finance meetings in Washington, D.C. amid a growing political backlash against the Conservative government’s proposed tax cuts.
The debt-financing measures, announced on September 23 and estimated to total 43 billion pounds ($48.7 billion), sent financial markets reeling. The British pound fell to a level All-time lows against the US dollar, Borrowing costs rose sharply and the Bank of England He was forced to intervene.
Sky News reported Debates are underway in Downing Street on Thursday over whether to reconsider some of the tax cuts announced by Kwarteng in the government’s so-called “mini-budget”. Corporation tax and dividend tax changes are also thought to be on the cards.
Sterling appeared in the news.
The British pound traded up 2% at $1.1319 on Thursday. Stronger-than-expected US inflation data. Sterling last traded down 0.8% at $1.124.
UK government bonds – known as gilts – rallied sharply on Friday morning, hitting a session on reports Truss will hold a press conference later in the day. The longer-dated 30-year yield last traded at 4.28%.
Kwarteng on Monday sought to allay lingering concerns by pushing the date of his plan to balance the government’s finances to Oct. 31.
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Truss and Kwarteng have repeatedly defended the government’s aggressive spending plan, insisting the proposals are necessary to spur economic growth.
Last week, Kwarteng reversed a plan to scrap the 45% income tax on those earning more than £150,000 ($167,646) a year.
Speaking from the US on Thursday, Kwarteng responded to questions about the potential U-turn by saying he was “fully focused on delivering the growth plan”.
Quarteng insisted that he was “not going anywhere” and that he and Truss would “100%” still be at their jobs next month.
Truss is under huge pressure to revise policies Opinion polls show that support for his government has fallen And investors continue to worry about the potential impact on public finances.
An official spokesperson for Truss told CNBC on Thursday that there was no change in the government’s position when asked about reports of a possible U-turn.
Asked by Sky News on Friday morning whether some aspects of the government’s mini-budget could be tweaked, UK International Trade Minister Greg Hands replied: “Let’s wait and see. You don’t have to wait until October 31 for the Chancellor. Those plans have to be made.”
Hands said both Truss and Quarteng are “absolutely committed” to their plans to grow the economy.
“Development Plan [is] Centerpiece, but some details remain to be seen, including the full forecast from the Office of Budget Responsibility on October 31.”
Downing Street and the Bank of England have been working to stabilize financial markets throughout the week.
Kwarteng on Monday sought to allay lingering concerns by pushing the date of his plan to balance the government’s finances to Oct. 31. The decision was welcomed by the International Monetary Fund. Kwarteng had initially said the government would not provide more details on its financial plan until November 23.
Bank of England on Tuesday declared An extension of its emergency bond-buying program, the pound fell and borrowing costs rose. “The prospect of a self-reinforcing ‘fire sale’ dynamic poses a material risk to UK financial stability,” it warned.
The Bank of England warned on Tuesday that “the prospect of a self-reinforcing ‘fire sale’ dynamic poses a material risk to UK financial stability.”
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The intervention marked the second expansion of the bank’s rescue package in as many days after it raised its daily gilt purchase limit on Monday. The end of the purchase program on Friday.
In mid-week, Truss told MPs he would not cut public spending to help pay for the government’s tax cuts.
— CNBC’s Elliott Smith contributed to this report.
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