Former UK Chancellor Lord Alistair Darling has rejected suggestions from the government that the market turmoil seen over the last week is a global problem, describing it as "entirely self-inflicted".

Darling, who was chancellor from 2007 to 2010 under Labour, tells the BBC the government appeared to be "complete novices… suddenly presented with a new toy to play with and didn’t understand what they were doing".

“They decided one of the first things they wanted to do was announce a huge amount of tax cuts but hadn’t thought through the obvious question - how are you going to pay for it,?" he tells the Today programme.

“Neither the prime minister or the chancellor said very much in the days after this. The only thing they said is there would be more underfunded tax cuts which spooked the markets who we depend on to borrow.

“I know from my own experience, if you lose control, if you lose credibility, it takes a long, long time to get it back and that is what has happened to them."

Darling adds: “They’ve got to publish a plan for paying for this, and if it does mean cutting public expenditure they need to confess to that."

Earlier this morning, financial secretary to the Treasury Andrew Griffith defended the mini-budget and the government's handling of the economy on BBC Breakfast.

Speaking to Naga Munchetty, he insisted the market turmoil seen since Friday's mini-budget was linked to global events, saying the war in Ukraine had "huge impacts" on the energy market and the UK economy.

Asked if the government would honour a pledge to keep the triple-lock on pensions, Griffith said he wouldn't comment on speculation that the formula for calculating payments could change.

Under the triple lock, pensions increase by whichever is greatest between inflation, the increase in earnings between May and July, or 2.5%.

The chairman of one of the UK's largest privately-owned construction companies has called for the chancellor to bring forward his planned financial statement on 23 November.

Sir James Wates, chairman of Wates Group, says the weakness of the pound against the dollar is impacting on costs for his firm, particularly around fuel.

“Materials coming to sites have to be delivered by vehicles that use fuel so the cost of distribution is going up along with interest rates, affecting our house purchases - so it’s coming at us from all angles," he tells BBC Radio 4's Today Programme.

He says there are some positives to the government's growth plan, including support for business through energy, investment zones and announcements of infrastructure projects that are going ahead.

But he adds: “The big thing we need in our sector is visibility on pipelines so we can plan our investment, we can plan skill training and if we start to see that, we can plan progressively."

More now from Andrew Griffith, financial secretary to the Treasury, who has been defending the government's handling of the economy on the morning broadcast rounds.

Griffiths insisted recent market turmoil had been a “largely global phenomenon” - a view a number of economists reject.

“Yesterday German inflation hit 11% - that’s higher than the rate of inflation in the UK. Going into last week, US interest rates had increased by more than the UK, so we’ve now caught up with that and the government is absolutely focused on bringing all of those things together," he tells the BBC.

Asked why he didn’t take up the offer of the Office for Budget Responsibility’s forecast alongside last week's mini-budget, he says “it’s important we now go forward and get those independent forecasts, the chancellor asked them to do that for 23 November".

Griffith says the government has a number of measures planned to grow the economy that have yet to be fully laid out in detail, arguing there is a "wholly wrong perception this is not a fiscally responsible government".

He argues so-called "supply-side" reforms the government is planning - on things like planning, childcare and worker visas - will "get the economy growing, make our public services more affordable, and means we can help the most vulnerable in society".

What is Truss's strategy for regaining market credibility?published at 08:31 British Summer Time 30 September 2022

08:31 BST 30 September 2022

Faisal Islam
BBC Economics Editor

The strategy from the government is that there will be no changes to the mini-budget.

They believe that the fleshing out of so-called "supply-side reforms" - to planning, energy, childcare, worker visas - will persuade markets that UK growth will accelerate.

The combination of these reforms over the next few weeks and a medium-term plan to reduce the national debt with "iron discipline" on existing spending plans, will, they argue, turn things around.

Read more.

Earlier this morning, the Office for National Statistics released data that suggests the UK is not currently in recession - contrary to what the Bank of England said recently - after the economy grew between April and June.

However, the ONS figures also show that UK economic growth is 0.2% lower than it was in the final quarter of 2019 before the Covid pandemic.

Previous estimates had suggested that it was 0.6% bigger.

"So despite the better news on the performance of the economy in the second quarter, the overall picture is that the economy is in worse shape than we previously thought," said Paul Dales, chief UK economist at Capital Economics.

"And that’s before the full drag from the surge in inflation and leap in borrowing costs have been felt."

Treasury minister Andrew Griffith has defended Liz Truss's decision to meet with the Office for Budget Responsibility after the government delivered its mini-budget.

Asked on BBC Breakfast about the OBR offering a forecast ahead of Friday's mini-budget, Griffith insisted there wouldn't have been time.

He said there had been a "huge amount to digest" in the plans that "the OBR couldn't have taken into account".

Chancellor Kwasi Kwarteng's announcements last week led to a slump in the value of the pound and a £65bn intervention from the Bank of England.

People claiming benefits could see a smaller increase than they had been promised under Liz Truss's predecessor Boris Johnson, according to a report in The Times, external.

It says the new prime minister is drawing up plans to raise benefits, such as universal credit, in line with average earnings instead of inflation.

Based on September's figures - which are usually used to dictate changes the following April - benefits would rise by 5.5%. That is likely to be much less than inflation which hit a 40-year high of 9.9% in August.

The Times reckons, external this would save the government £5bn. In contrast, its decision to lower the top tax rate of 45% for people earning over £150,000 a year will cost £2bn, according to the Institute for Fiscal Studies.

Plus, the government has already said it would honour its "triple-lock" pledge on pension increases which means payments would rise in line with inflation.

Earlier this week, the International Monetary Fund issued a rare rebuke , externalof the government's plans, stating: "The nature of the UK measures will likely increase inequality."

The pound is up against the dollar this morning, but it remains "very vulnerable", the head of foreign exchange strategy at Rabobank has said.

One of the things unnerving financial markets is that there is a long wait - 23 November - until Chancellor Kwasi Kwarteng sets out his fiscal plan.

Jane Foley, from Rabobank, tells the Today programme: "We've seen how fast markets can react over the course of the past week."

She says the Bank of England's "extraordinary intervention" to buy up £65bn of government bonds between now and 14 October has brought "some calm and some time in the markets".

"But certainly this isn't over by any stretch of the imagination despite the fact that we have seen a recovery on sterling right now," she adds.

"The markets remain pretty volatile and I think UK assets, particularly sterling, will remain very vulnerable."

The prime minister and the chancellor meeting the budget watchdog will be critical for regaining market confidence, a senior Conservative MP has said.

Mel Stride, who chairs the Treasury select committee, is among MPs in his party calling for the Office for Budget Responsibility's draft forecast of last week's mini-budget to be released now.

“The judgement so far of markets is that what was announced last Friday doesn’t stack up fiscally and some changes are going to need to be made," Stride tells BBC Radio 4's Today Programme.

“Possibly now we can have a major reset moment in which confidence can be regained.

“The government will argue we’ve got this plan for growth, we’ve got these supply side reforms, we can turbo charge that, we can get longer term growth onto a new medium term footing of 2.5%. We haven’t achieved that for over a decade, so that’s quite a big ask."

While financial markets will welcome the prime minister's decision to meet with the Office for Budget Responsibility: "It is a little bit like locking the stable door after the horse has gone," says Jane Foley, head of foreign exchange strategy at Rabobank.

She tells the Today programme: "The government has already suffered a huge loss of credibility. Obviously, the Bank of England has suffered a drop in its credibility as well."

Foley says it is "a good move" that the OBR will provide its forecasts on government debt, the deficit and economic growth. "But I don't think it is going to reverse the credibility issues that the last budget raised."

The upheaval in the markets comes just as a new cap on the price of energy comes into force on Saturday.

In a round of radio interviews on Thursday, Liz Truss mentioned a £2,500 fuel price cap several times, sometimes giving the impression that no household will face a yearly fuel bill of more than this.

This is not the case: the £2,500 cap refers to the limit a typical household will have to pay - but not all households are typical.

A bill depends on how much energy you actually use, how well the property is insulated, and the number of occupants in your home. It does not mean that you will pay £2,500 regardless of how much energy you use.

The government said the cap will be in place for two years.

Find out more here.

The UK's economy grew in the second quarter of this year, contrary to an initial estimate of a small contraction, according to revised official data.

The Office for National Statistics said economic output rose by 0.2% in April through June, revised up from a previous reading of -0.1%.

It suggests the UK is not currently in recession, as was predicted by the Bank of England earlier this month.

A technical recession is when the economy witnesses two consecutive quarters of decline.

Image source, Getty Images

The market volatility seen this week means mortgage products are "lasting barely a day or two days", a mortgage broker has told the BBC.

While there has been rapid changes in mortgage rates throughout the year, David Hollingworth from L&C says this has “gone into overdrive this week” with some lenders stepping back from the market altogether.

He says several lenders such as Virgin Money are coming back today, but with rates that are much higher.

“Ten days we ago we might have been talking about fixed rates at benchmark 4%. Increasingly we’re seeing those rates come through five, even 6% or more on some products," he tells BBC Radio 4's Today Programme.

"It’s only 12 months ago that five-year fixed rates were available at, or even below, 1% - the pace of change is absolutely astounding.

Asked whether buyers can have their mortgage offer withdrawn, he says existing applications should progress as normal.

“We’re looking at very choppy waters still whilst lenders try and make sense of where they should be pricing."

Image source, Reuters

Prime Minister Liz Truss is to meet other European leaders at a new political "club of nations" in Prague.

The inaugural summit of the European Political Community (EPC), proposed by French president Emmanuel Macron, will take place next Thursday.

The UK is among more than a dozen non-EU nations invited to join EU members to discuss security and energy issues.

Truss has only just indicated she could attend the first meeting, which Macron hopes will provide a new space for co-operation.

Read more about the EPC meeting here.

Image source, PA Media

The government’s decision not to publish an Office for Budget Responsibility forecast as it set out its mini-budget raised eyebrows.

The forecasts are normally published when the government makes major financial announcements, like on a formal Budget day.

It has now been confirmed the OBR offered to issue a forecast based on the mini-budget - but no request for this was made.

A group of MPs is calling on Chancellor Kwasi Kwarteng to publish it before the current scheduled date of 23 November.

One of them, Mel Stride, said the failure to publish the forecast led to the "unfortunate impression that the government may be seeking to avoid scrutiny".

Read more here.

Conservative MP Geoffrey Clifton-Brown has called on the government to set out more details of its spending plans.

Last week's mini-budget included pledges to "expand the supply side of the economy" with measures including reforms to the planning and immigration systems, but few details have yet been announced.

Speaking to BBC Two's Newsnight, Clifton-Brown said: “What is really important now… is how we can reassure the international markets that we actually really know what we want to do with the economy.

“The problem is, at the moment, last Friday’s statement was only half the story. The other half of the story, which is really important, is what our expenditure plans are.

“It’s all very well getting the fiscal side of it, but you need the expenditure side to balance that.”

He also called on the government to move forward the chancellor’s next statement, currently due to be delivered on 23 November.

“What we need to do is reassure the markets,” he said. “They need to set out plans as to what the debt-to-GDP ratio will be this year, next year, and in five years’ time.”

We've been reporting the impact of last week's mini-budget on the financial markets - but the impact has also been felt by consumers.

On last night's BBC One's Question Time, a young audience member described an extraordinary rise in the interest rates on mortgage deals available to her following the mini-budget.

"I was actually in the process of getting a mortgage as a young person," the woman, named Rabia, said.

"I was told my initial interest rate would be 4.5%, and I was told today that the lender has pulled that offer, and now the best offer that I can get is about 10.5%."

She said she was quoted the lower rate around two weeks ago. The contribution drew gasps from other audience members.

In response, Local Government Minister Paul Scully said the government would seek to provide more certainty and "settle down the lending market" by "communicating far clearer, far better".

Peter Hoskins
Business reporter in Singapore

Early in Friday’s Asia trading session, the pound rose to a fresh one-week high of $1.1222 before dipping to around $1.11.

That took it close to regaining all of its losses against the dollar since the government unveiled its so-called mini-budget a week ago.

It comes as Downing Street has been trying to reassure investors about its economic plans.

Market reaction to last week’s announcement helped drive sterling down to a record low of $1.0327 on Monday.

More now on our developing story this morning.

Prime Minister Liz Truss and Chancellor Kwasi Kwarteng are set to meet the head of the Office for Budget Responsibility, the UK's independent financial forecaster.

The meeting is an unusual move, but is the latest step in the government’s attempts to reassure the markets about its economic plans.

The government's failure to publish OBR forecasts for borrowing and spending alongside the mini-budget has been identified as a factor in the volatility that followed.

Read the full story here.