The British economy continues to teeter on the brink of recession

Chancellor and PM called in the OBR on September 30 Credit: Rory Arnold / No 10 Downing Street flickr

THE British economy continues to teeter on the brink of recession and Chancellor Kwasi Kwarteng has had to change course quickly.

After scrapping the removal of the 45 per cent top tax limit he has decided it prudent to obtain independent forecasts from the Office for Budget Responsibility (OBR) which is a non-departmental public body funded by the UK Treasury.

In addition, he has brought forward to October 31 his detailing of his plans to balance the public finances in a move that he hopes will settle both the bond and currency markets.

After the Chancellor blamed the problems with the September 23 mini-budget on the death of the queen, Business Secretary Jacob Rees-Mogg told BBC Radio 4’s Today programme that it is possible that the problems were caused not by the Treasury but by the Bank of England for not raising interest rates in line with the USA.

In a very forthright statement, the Governor of the Bank of England Andrew Bailey indicated that he was not expecting to help UK Pension Funds keep their liquidity by purchasing long term Government Bonds and that they needed to find their own solutions which may in turn increase the cost of Government borrowing.

The pound continued to yoyo up and down against the dollar and lost some ground against the euro although it was helped slightly when the Financial Times suggested that it had inside information that the Bank of England would continue to support bonds if it considered it necessary.

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