Rees-Mogg hits out at BBC for blaming mini-budget for market turbulence
A Cabinet minister accused Today programme presenter Mishal Husain of failing to meet the BBC’s impartiality standards after she suggested the mini-budget had unleashed the recent chaos in financial markets.
Business Secretary Jacob Rees-Mogg sought to claim that the Bank of England’s decisions on interest rates had caused the turmoil, rather than Chancellor Kwasi Kwarteng’s plans to borrow more to fund tax cuts.
Husain said there is a “very serious economic and investor confidence picture that has been sparked by the mini-budget” as she questioned the minister on BBC Radio 4’s Today programme.
Mr Rees-Mogg told her: “You suggest something is causal, which is a speculation.
“What has caused the effect in pension funds, because of some quite high-risk but low-probability investment strategies, is not necessarily the mini-budget – it could just as easily be the fact that, the day before, the Bank of England did not raise interest rates as much as the Federal Reserve did.
“And I think jumping to conclusions about causality is not meeting the BBC’s requirement for impartiality, it is a commentary rather than a factual question.”
He added: “I’m saying it’s primarily caused by interest rate differentials rather than by the fiscal announcement.”
But Nigel Peaple, director of policy and advocacy at the Pensions and Lifetime Savings Association, said: “The origin of these problems seems to have been caused mainly by the mini-budget, because of market reaction to that mini-budget, because of uncertainty about the Government’s plans.”
He suggested the markets could be calmed when the Chancellor sets out more details about how he intends to manage the public finances.
We are seeing bond yields rise because there is so much uncertainty about the fiscal policy of the Government
Christian Kopf, head of fixed income at German firm Union Investment, said the mini-budget is “absolutely” to blame.
He told Today: “The problem we are facing in the United Kingdom is the excessive current account deficit that the country is running, it exports much less than it imports, it saves much less than it invests and consumes, and the country is living beyond its means.
“The mini-budget that has been announced by the UK Government is only making matters worse by increasing that fiscal deficit and by increasing the current account deficit of the United Kingdom, and it got to a point where investors are unwilling to fund that.”
Lucy Coutts, investment director at JM Finn, told the programme the Bank of England was doing its job of trying to control inflation “very well” until the mini-budget.
“This is a self-inflicted wound and that is why markets are responding in such a poor way,” she said.
“That’s why we are seeing bond yields rise, because there is so much uncertainty about the fiscal policy of the Government.”
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