Finanze® Daily Digest - 30/09/2022

The Brief: The Guardian reported that Liz Truss and Kwasi Kwarteng will be meeting with Richard Hughes, chairman of the Office for Budget Responsibility (OBR) on Friday before receiving a copy of the office’s full fiscal forecasts next week.

Why It Matters: Chancellor Kwarteng’s September 23 speech triggered a market crisis after he promised more tax cuts. Nothing was heard from Truss after the mini-budget announcement until yesterday when she broke her silence. In an interview, the PM admitted that her decisions are “controversial and difficult” but are necessary to drive economic growth.

Finanze® Foresights: Critics point out that the scheduled meeting is a tardy effort to calm the turmoil that shook the markets last Monday, similar to Kwarteng’s recent roundtable discussion with bankers. In our opinion, the tumultuous reaction was already imminent when Kwarteng refused to let the OBR publish its forecast alongside his mini-budget. The independent assessment may likely contradict Kwarteng’s rosy claims but if Downing Street is asking the public to remain calm, then acknowledging the report and acting on it is a good start. But now that the BOE has also intervened to pacify the chaos, Kwarteng has asked the OBR to release new forecast figures together with his full speech on November 23rd. The OBR announced that it would be asking him if they could release the figures before October, but we doubt if the chancellor would consent to such a proposal.

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