LONDON, United Kingdom – British finance minister Kwasi Kwarteng sought to reassure investment bank executives on Wednesday, September 28, the government had sound fiscal plans, in the face of a meltdown in British assets.
Kwarteng laid out a so-called mini-budget last Friday, September 23, that sent British bond markets and the pound into a tailspin, prompting the Bank of England to say it would buy as much government debt as needed to restore financial stability.
In a meeting with finance industry bosses shortly before the central bank’s intervention, Britain’s new chancellor underlined the government’s “clear commitment to fiscal discipline,” a Treasury readout of the meeting said. The meeting was attended by bosses from firms including JPMorgan and Bank of America, the readout said.
One person who attended, who declined to be named, said those present remained concerned.
“There was a lot of nervousness in the room,” the attendee said, adding Kwarteng had said he wanted to maintain high standards at the same time as deregulating. “They want the perfect world. It’s a little bit concerning.”
Another source said Kwarteng had asked the assembled finance bosses what could be done to calm markets.
The minister seemed to push the problem in their direction, another attendee said, adding that the executives told Kwarteng that a planned November 23 fiscal update was too far away.
A third source urged the chancellor to step up frequency of communication before that date, pointing out the dangers of radio silence.
Kwarteng told the meeting that the government was working closely with the governor of the Bank of England and forecasters at the Office for Budget Responsibility on the medium-term fiscal plan due November 23, the readout said.
“The chancellor also discussed with attendees how last Friday’s Growth Plan will expand the supply side of the economy through tax incentives and reforms, helping to deliver greater opportunities and bear down on inflation,” it added.
Other companies represented at the meeting included Citi, UBS, and Deutsche Bank, along with several stock exchanges including the London Stock Exchange and Intercontinental Exchange.
The Treasury statement made no reference to the market turmoil of recent days.
The meeting was part of a series of roundtables ahead of a planned financial services deregulatory package next month, it said.
“Ahead of the upcoming Big Bang 2.0 deregulatory moment for financial services, the chancellor discussed potential sectoral reforms that are targeted at boosting growth, generating investment, and delivering higher wages across the UK.
“The chancellor reiterated his view that ‘a strong UK economy has always depended on a strong financial services sector.'”
One of the attendees said Kwarteng outlined no new regulatory policies or ideas for the sector at the meeting.
“There is no magic tree out there. He did not say we are going to do this and this,” the source said.
“The advice to him was not to get into panic mode, keep on telling the market what you are doing, we don’t want disorderly markets.” – Rappler.com