The Bank of England has been forced into emergency action to halt a run on Britain’s pension funds after the impact of Kwasi Kwarteng’s ill-received mini budget prompted fears of a 2008-style financial crisis.
Threadneedle Street said the fallout from a dramatic rise in government borrowing costs since the chancellor’s statement had left it with no choice but to intervene to protect the UK’s financial system.
City sources said the surprise move, less than a week after Kwarteng’s unfunded tax giveaways, was needed to halt a “doom loop” in the bond markets that risked draining pension funds of cash and leaving them at risk of insolvency.
The Bank was concerned that it threatened the financial health of Britain’s biggest pensions and insurance companies, which together manage trillions of pounds of people’s cash
The market has been reacting to the budget announcement of last Friday by Kwarteng. Trickle down economics - policies announced by his majesty's government haven't been well received by the financial markets.