Bank of England in new emergency moves over ‘material risk’ to financial system... IT’S ALL GOING TO SHIT!
ANOTHER day…another crisis.
The Bank of England yesterday warned of a “material risk” to financial stability as it made a fresh emergency move in a bid to calm investors. The Bank said it would buy more government bonds to try and stabilise market conditions.
The emergency scheme started after September’s minibudget, which spooked markets and drove up borrowing costs.
Costs of Government borrowing rose again sharply after the Bank said the scheme would indeed end as planned on Friday.
A decision by the chancellor “Kami” Kwasi Kwarteng to bring forward his new plan to balance the government’s finances by three weeks also failed to reassure investors.
In the wake of the September mini-budget, the pound slumped to a record low, government borrowing costs surged and the Bank of England was forced to step in and take emergency action after the dramatic market movements put some pension funds at risk of collapse.
The market volatility eased but on Monday government borrowing costs were almost at the levels seen at the height of the market turmoil.
Emergency
The central Bank said government bonds had seen a “significant repricing” since the start of the week and warned there was a risk of a fresh downturn in markets.
It said it would now buy a wider range of bonds as well as continue to buy bonds as part of the original emergency measures it launched on 28 September.
The Bank’s move is intended to prevent the whole economy disappearing up its own arsehole and sparking another major crisis.
The move came as the Institute for Fiscal Studies think tank warned that Mr Kwarteng must make “big and painful cuts” of up to £60bn to balance the books when he announces his economic plan on Halloween.