In a letter to the Treasury Committee of the British Parliament published on Monday, Mr Kwarteng said the government had asked the public budget forecasting body (OBR) by October 31 for projections on the economic impact of the measures presented at the end of September. .

They will be unveiled that day at the same time as "the government's medium-term budget plan", where financing measures are eagerly awaited.

The Chancellor of the Exchequer had set fire to the markets at the end of September with a budget including vast aid for energy bills, in the face of the crisis in the cost of living, but also significant tax cuts targeting above all the most vulnerable households. affluent.

The whole was not quantified but the economists evaluated this package of measures at a colossal amount of 100 to 200 billion pounds.

Without planned savings measures, it had to be financed entirely by borrowing on the markets at a time when interest rates were rising sharply, in the face of very high inflation of almost 10% in the United Kingdom, the highest in the G7. .

British Finance Minister Kwasi Kwarteng at the Conservative Party Congress on October 4, 2022 in Birmingham Oli SCARFF AFP / Archives

Investors began to doubt the credibility of the British budget and the ability of the State to repay its long-term debt and offloaded British assets, causing the pound to plunge to an all-time low, and soar long-term London borrowing rates.

Central bank intervention

Faced with the risk of a downward spiral on long-term bond securities which weakened pension funds and risked spreading to credit conditions for households and businesses, the Bank of England had to intervene from 28 September.

It had launched a program of up to 65 billion pounds to buy back long-term Treasury bills to prevent a collapse of liquidity in this market and to ease the volatility of prices and rates.

On Monday, the Bank of England also announced new measures to ensure financial stability in British markets, before the expiry of its long-term bond buyback program on Friday.

In particular, it doubles to 10 billion pounds daily the amount of securities it is able to buy back, even if for the moment only 5 billion pounds have been used for the entire program.

Kwasi Kwarteng's budget presentation had been unanimously condemned, with the IMF issuing a rare and scathing appeal to rectify the situation, and the rating agencies lowering their outlook on British debt.

Bank of England Governor Andrew Bailey, in London on August 4, 2022 Yui Mok POOL/AFP/Archives

Kwasi Kwarteng is traveling to Washington this week, like Bank of England Governor Andrew Bailey, for the fall meetings of the International Monetary Fund (IMF) and will try to reassure the international financial community of the credibility of his fiscal plan.

"The central bank's intervention has helped calm government debt markets but there are still concerns about what will happen next week after its support program ends, and whether the dysfunctions come back," said Victoria Scholar, an analyst at Interactive Investor.

The yield on 30-year government bonds, which had risen from 3% in early September to more than 5.14%, a peak since 1998, before the intervention of the BoE, was still moving on Monday around 09:45 GMT at 4.48 %.

© 2022 AFP