Britain’s new Prime Minister Rishi Sunak on Wednesday delayed the announcement of a plan to repair the country’s public finances until Nov. 17, two-and-a-half weeks later than originally planned.
Finance minister Jeremy Hunt announced the move in a televised statement, saying it was prudent to delay the plan to ensure it took into account the latest economic forecasts.
”The prime minister and I have decided that it is prudent to make that statement on the 17th of November,” Hunt said.
The plan is expected to set out how the government will plug a budget shortfall of as much as 40 billion pounds ($45.88 billion).
Britain’s credibility in financial markets was shaken last month when former prime minister Liz Truss announced a string of unfunded tax cuts, triggering a bond market rout so severe the Bank of England had to intervene and Truss was forced into a U-turn and eventually resigned.
”Our number one priority is economic stability and restoring confidence that the United Kingdom is a country that pays its way and for that reason, the medium-term fiscal plan is extremely important,” Hunt said.
”I want to confirm that it will demonstrate debt falling over the medium term.”
British government bonds extended their losses on confirmation of the delay. Long-dated gilt yields hit new session highs as they rose 12-13 basis points on the day. Sterling was little changed by the announcement.
Earlier on Wednesday, Sunak gathered his cabinet for the first time, a day after he took over from Truss with a promise to fix his predecessor’s mistakes and stabilise the economy.
The budget plan delay will complicate the Bank of England’s job next week when it is due to publish forecasts for the economy without knowing the details of the government’s fiscal plans, as well as take its latest monetary policy decision.
The BoE is expected to raise interest rates again – probably to 3.0% from 2.25% now – on Nov. 3.
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