Economists have roundly rejected Business Secretary Jacob Rees-Mogg’s claim the UK’s financial turmoil was not being driven by the mini-budget. The senior Conservative today sought to attribute blame to the Bank of England’s failure to raise interest rates in line with the US for the chaos in the markets.
But a range of financial experts unanimously told MPs that Chancellor Kwasi Kwarteng’s £45billion giveaway of unfunded tax cuts played a major role in the pound’s plunge. They said the sacking of the Treasury’s top civil servant Sir Tom Scholar and the delay to publishing the Office for Budget Responsibility’s independent forecasts also contributed.
Deutsche Bank’s chief UK economist Sanjay Raja told the Commons Treasury Committee the mini-budget on September 23 was the “straw that broke the camel’s back”. Mr Raja argued there is “absolutely a global component” to the chaos but was adamant there is an “idiosyncratic UK-specific component” as well.
