Kwasi Kwarteng, UK chancellor, has told leading bankers, insurers and asset managers he is “confident” that his economic strategy will work, as he tried to reassure the City of London after days of turmoil on the financial markets.
He also said he was meeting Andrew Bailey, Bank of England governor, on a daily basis to try to stabilise markets. “We’re working closely together,” he said on Tuesday.
Kwarteng said he remained committed to bringing debt under control and insisted that his £45bn of tax cuts – to be funded by borrowing – would boost growth in the medium term.
In a meeting ostensibly scheduled to discuss regulatory reforms in the City of London, the issue of market turbulence after last week’s fiscal statement dominated the discussions.
Kwarteng used the meeting to try to reassure bosses of companies including Aviva, Legal and General, Royal London, BlackRock, Fidelity, and JP Morgan that he had a grip on the situation.
“We are confident in our long-term strategy to drive economic growth through tax cuts and supply side reform,” Kwarteng said. “Supply side reforms are critical – increasing capacity brings down prices.”
In a readout of the meeting issued by the Treasury, Kwarteng also told the City leaders: “We are committed to fiscal discipline, and won’t re-open the spending review.”
He said that he would publish “a credible plan to get debt to gross domestic product falling” on November 23 alongside forecasts by the independent Office for Budget Responsibility.
“We have responded in the immediate term with expansionary fiscal stance on energy because we had to,” he said. “With two exogenous shocks – Covid-19 and Ukraine – we had to intervene. Our 70-year high tax burden was also unsustainable.
“I’m confident that with our Growth Plan and the upcoming Medium Term Fiscal Plan – with close cooperation with the Bank – our approach will work.”