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Investors had turned away from British assets, including the pound and government debt after the disastrous budget program of then-Prime Minister Liz Truss, who enacted a series of unfunded tax cuts. The markets let down their guard only after the resignation of Truss and the arrival of Rishi Sunak as prime minister.
The Governor of the Bank of England, Andrew Bailey, assured that the financial effects unleashed by the controversial tax measures of former Prime Minister Liz Truss at the end of 2022 were overcome, although he warned that the blow to the credibility of the United Kingdom still endures.
“We have returned to the place where we were before,” Bailey said before the Treasury committee of the House of Commons, where the deputies questioned several senior officials of the central entity about the financial stability of the country.
Jonathan Hall, a member of the bank’s Monetary Policy Committee, found that “the interest curve of the British debt returned to a large extent to normal” and “liquidity returned to the market.”
Bailey warned that “it will take some time to convince everyone that we are in the same place as before.”
The aggressive tax cut plan announced by Truss last September skyrocketed the cost of debt, brought several pension funds to the brink of collapse and forced the Bank of England into a multi-million dollar emergency purchase of government bonds.
The issuer used 19,300 million pounds, about 21,760 million euros, of the 65,000 million pounds (73,300 million euros) reserved for that repurchase, and ended last week to get rid of those bonds with a profit of 3,950 million euros.
Bailey informed Finance Minister Jeremy Hunt that the bank got rid of all the bonds acquired during that program and stressed that the profits obtained were incorporated into the entity’s quarterly accounts.
with EFE
