Tories blame ‘City boys’ for sparking economic chaos as traders are accused of ‘trying to make money out of bad news’ as the pound slumped in global markets amid concern at Truss and Kwarteng’s tax-cutting plans
- Traders in London accused of exacerbating Budget fallout for personal gain
- ‘City boys’ accused of ‘playing fast and loose with the economy’ to short pound
- Sterling down again as Bank of England stopped short of emergency rate hike
Senior Tories attempted to heap blame on ‘City boys’ trying to make money out of a crisis amid further economic turbulence today.
As the pound continued its nosedive towards parity with the US dollar they lashed out at traders in London, accusing them of exacerbating the fallout from Friday’s mini-budget for personal gain.
Some have been accused of ‘shorting’ the pound – gambling they can sell a currency at a high price before buying it back after a fall and pocketing the difference.
Allies of Liz Truss and Kwasi Kwarteng said traders had been ‘playing fast and loose with the economy’, telling the Times: ‘It was bound to happen. It will settle.’
The pound tumbled again tonight as the Bank of England stopped short of an emergency interest rate hike in the wake of the Chancellor’s tax-cutting Budget.
The Pounds clawed back ground by early afternoon, returning to just over $1.08 – but then tumbled again after the Bank of England stopped short of raising rates
The pound is down eight per cent since Liz Truss was elected PM three weeks ago and down approaching 25 per cent since that start of the year. It is a similar story for the euro
Former Cabinet minister John Redwood (right) told MailOnline that traders were ‘trying to make money out of bad news’ and both the Bank and government should ‘completely ignore’ the shifts.
Governor Andrew Bailey issued a statement insisting Threadneedle Street ‘will not hesitate to act’, but did not pull the trigger on an increase that markets had anticipated.
The move came after the Kwasi Kwarteng tried to calm market fears by announcing he will lay out fiscal rules on government debt as part of an Autumn Statement on November 23 – alongside a full independent assessment of the state’s books.
On a rollercoaster day, Sterling was hammered in trading early this morning, dropping to just $1.0327 – under the grim 1985 baseline of $1.0545.
The ground was clawed back by early afternoon, returning to just over $1.08. However, that was partly due to expectations of an emergency 0.75 percentage point interest rate hike.
When it did not materialise this evening the currency quickly went back down to $1.06.
Former Cabinet minister John Redwood told MailOnline that traders were ‘trying to make money out of bad news’ and both the Bank and government should ‘completely ignore’ the shifts.
‘You should completely ignore it if you’re the government or Bank of England. These are extremely volatile markets with some very large players clearly running very big bear positions, and other players coming in to take them on,’ he said.
‘There are big players trying to make money out of bad news… if the Pound gets too cheap people should go and buy it, simple as that.’
But former Conservative chancellor George Osborne welcomed news that the Chancellor has commissioned an updated forecast from the Office for Budget Responsibility, the lack of which was a major point of contention around the mini-budget announced on Friday.
‘Good to see the Government now taking steps to recognise the value of the UK’s central economic policy bodies – crucial to credibility,’ he tweeted.
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