Business & Economy

Kwarteng meets with top bankers after mini-budget sparks market chaos

London, Sep 27 (EFE).- The United Kingdom’s new chancellor Kwasi Kwarteng is meeting with the capital’s top bankers Tuesday in a gathering that was originally slated so he could discuss his mini-budget but has now been touted as a crisis meeting after his fiscal deregulation spooked markets and sent the pound plummeting.

Kwarteng is meeting with senior figures from the City of London, pension fund managers, insurers and asset managers to thrash out his budget, which has been dubbed a Big Bang 2.0, after the announcement of his plans to slash taxes and increase domestic borrowing unleashed market chaos.

According to the British media, Kwarteng will meet with leaders of Aviva, Legal and General, Royal London, BlackRock, Fidelity and JP Morgan.

The chancellor’s plans for fiscal deregulation, which includes eliminating a cap on banker bonuses, have sparked turmoil and sent the pound crashing with the UK’s currency reaching a drop against the dollar not seen since 1971.

Although the pound seems to have stabilized Tuesday morning (it was trading below $1.08 at 10:00 GMT), several analysts have warned that the pound could sink to below parity with the dollar.

The Bank of England, which last week raised its interest rates by 0.50 points to 2.25%, said on Monday that it will not hesitate to take the necessary measures to stabilize markets, although it did not announce an extraordinary rate hike, as had been speculated.

But the effects of volatility are already taking a toll in the sector, with British banks Virgin Money and Halifax announcing on Monday the temporary suspension of some of their mortgage products.

“Given market conditions, we have temporarily withdrawn Virgin Money’s mortgage products for new clients,” a spokesperson for the financial entity told Efe.

Halifax, a subsidiary of Lloyds Banking Group, said it would temporarily withdraw its fee-paying mortgage products. EFE


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