We've got more reaction to today's financial storm from Labour, which is calling for an urgent statement from the Chancellor Kwasi Kwarteng on how he is going to stabilise the economy.

Shadow chancellor Rachel Reeves made the call following the Bank of England’s announcement that it will buy up government debt.

She says people will be "deeply worried" about the cost of their mortgage, about their pensions, and the cost of living.

She says the financial upheaval is a "direct result of the Conservative government's reckless actions, which include tax cuts for the richest 1%".

“Their decisions will cause higher inflation and higher interest rates - and are not a credible plan for growth," she says. “The Chancellor must make an urgent statement on how he is going to fix the crisis that he has made.”

Coming up at 14:00published at 13:09 British Summer Time 28 September 2022

13:09 BST 28 September 2022

Britain's turbulent financial situation is hitting people in all sorts of ways - from banks pulling mortgage deals to further hikes in High Street prices.

At about 14:00, we'll be joined on this page by the BBC's personal finance correspondent Kevin Peachey and personal finance analyst Myron Jobson. They will be answering your questions about how the turmoil is affecting you.

You can send us your questions at the top of this page, or email YourQuestions@bbc.co.uk

Image source, Reuters

Deputy Labour leader Angela Rayner has criticised the Conservative government during her closing speech on the last day of the Labour Party conference, saying: “Defenders of the free market? The market’s in freefall.”

“From the party of business to a slap down from the IMF,” she says.

“When interest rates were low and borrowing was cheap, [the Tories] sacrificed public services for austerity - now they’re borrowing just as interest rates are soaring."

Rayner went on to attack Chancellor Kwasi Kwarteng, saying he had written a pamphlet in 2012 as an MP, demanding a balanced budget every year.

“He said fiscal prudence is the very least we should expect from the chancellor and if we fail they should face a 20% pay cut.

"That Tory MP must be absolutely furious with the new chancellor... except he is the new Tory chancellor."

The big drop in the pound after the Bank of England announced it would buy government debt to stabilise the economy comes after sterling spent a couple of days regaining value.

Sterling briefly collapsed to a 37-year low of $1.0327 on Monday following Chancellor Kwasi Kwarteng's mini-budget on Friday.

Afterwards, it hovered around the $1.07 and $1.08 mark.

But earlier today it was down to $1.06 following the International Monetary Fund's criticism of the UK's mini-budget.

The pound has since fallen further to $1.05.

That's close to the lows seen at the beginning of the week.

The pound, which was steady in morning trading, has started to fall sharply since the Bank of England’s emergency move to try and calm markets.

It’s currently 1.6% lower against the dollar at $1.05. Capital Economics economist Paul Dales warned fears over the UK's economic outlook were growing.

"This shows that the Bank is going to do all it can to prevent a financial crisis... While this is welcome, the fact that it needed to be done in the first place shows that the UK markets are in a perilous position."

Scotland's First Minister has urged MPs to end their recess early and return to Parliament, arguing the UK is in the "grip of a rapidly deteriorating economic crisis".

Sturgeon added it was "extraordinary" there had been an emergency intervention by the Bank of England to "reduce damage" from the government's policies.

The leader of the SNP called for the plan to abolish the additional rate of income tax for top earners to be "dumped".

She went on to ask on Twitter, external: "Where even is PM?", a reference to there being no public statement from Liz Truss this morning.

Image source, REUTERS

The pound has fallen further in value against the US dollar - slumping 1.5% to $1.0570.

That's after the Bank of England announced it would buy government bonds to stabilise the market.

The Bank of England has said it will buy as much government debt as is necessary to stabilise the economy. This is a u-turn as the Bank had been preparing to sell off the debt.

The government borrows money by selling bonds - a promise to pay someone money in the future.

So it's basically an interest-paying "IOU".

Government bonds - known as "gilts" - are appealing because they are seen as very safe, with little risk that the money won't be repaid.

They are normally mainly bought by financial institutions, such as pension funds, investment funds, banks and insurance companies, from the UK and abroad.

Where does the government borrow billions from?

Torsten Bell, the chief executive of the Resolution Foundation think tank, has described, external it as "nuts" that the Bank of England has had to intervene to restore order in government bond markets.

Bell, a former Labour adviser, says the government should not have got the country "into this position in the first place".

The Bank is "effectively doing temporary QE to stop wild increases in rates on long-term gilts", Bell adds.

QE means quantitative easing - when central banks go into the financial markets and create new money to buy financial assets.

The former deputy governor of the Bank of England, Prof Sir Charlie Bean, says the Bank's intervention to buy government bonds in order to stabilise the economy is "the right thing to do".

Speaking to the BBC, he says it has been a "very successful and important intervention" already, after government bond yields for 30-year borrowing were brought down by more than half a percentage point following the Bank's announcement.

Read more on bonds and yields here.

Earlier we reported that Chancellor Kwasi Kwarteng was due to meet with investment banks today in a bid to reassure the City about his economic plans.

A short time ago, JP Morgan's chief executive in Europe, the Middle East and Africa, Viswas Raghavan, arrived at the Treasury for a meeting with Kwarteng.

Bank of America's international president Bernard Mensah was also seen arriving at the Treasury, where he gave reporters a quick smile but ignored all questions as he walked in.

The executives were later seen leaving through the front door of the Treasury.

They did not respond to any questions about what assurances had been offered by Kwarteng in the wake of the pound's slumping value.

Bank of England launches massive surprise interventionpublished at 11:40 British Summer Time 28 September 2022

11:40 BST 28 September 2022

Faisal Islam
BBC Economics Editor

The Bank of England has launched a surprise and potentially huge intervention in government bond markets to prevent what it said was a “material risk to financial stability” arising from market turmoil after Friday’s mini-budget.

The Bank will now buy unlimited quantities of long-term debt.

The effective interest rates being charged to the UK government in these markets was spiralling to 20-year highs. That has now fallen back.

It is very similar to the policy of quantitative easing that saw money pumped into the economy during crisis periods. It could also help the government’s funding costs.

But it was not a decision made by the Bank’s Monetary Policy Committee, who were informed of the decision after it was made by the Bank’s financial experts.

It comes at exactly the same time as that committee had been committed to doing the exact reverse policy - selling government debts.

The process was due to start next week and has been delayed. It is a massive intervention, but it could confuse markets about the clarity of policy making.

The Treasury has just responsed to the Bank of England's statement that it would be stepping in to calm markets by buying government bonds.

"Global financial markets have seen significant volatility in recent days," the Treasury says.

"The Bank has identified a risk from recent dysfunction in gilt markets, so the Bank will temporarily carry out purchases of long-dated UK government bonds from today in order to restore orderly market conditions."

The Treasury added that Chancellor Kwasi Kwarteng was committed to the Bank of England’s independence.

"The government will continue to work closely with the Bank in support of its financial stability and inflation objectives."

The statement confirmed the Bank's assurance that the purchases will be strictly time-limited, and completed in the next two weeks and fully indemnified by HM Treasury.

The Bank of England has just announced that it will buy government bonds to "restore orderly market conditions".

This intervention is the Bank’s latest attempt to calm the markets after the pound fell and the cost of government borrowing spiked following last week’s mini-budget.

The Bank says "the purchases will be carried out on whatever scale is necessary to effect this outcome".

It warns that if market volatility continues there is a "material risk to UK financial stability".

Government bond yields (the effective cost of government borrowing), especially at longer borrowing durations, have spiked in the past few days as investors continue to worry about the UK economy.

The Bank says the operation will be fully indemnified by HM Treasury and that the purchases would be "time limited".

Auctions will take place from today until 14 October.

The Bank of England has said it will start a temporary programme of bond purchases to stabilise the market.

The Bank will also postpone the planned start of its gilt sale programme, it announced in a statement.

"The Bank will carry out temporary purchases of long-dated UK government bonds from 28 September.

"The purpose of these purchases will be to restore orderly market conditions," it says.

Kevin Peachey
Personal finance correspondent

The withdrawal of mortgage products hit unprecedented levels overnight, according to analysts.

Moneyfacts, a financial information service, said 935 mortgage products were taken off the shelf compared with a day earlier.

It said that was the biggest overnight drop it has ever recorded. It was double the previous biggest drop, which occurred during Covid.

A total of 2,661 mortgage products are still available – but that is half the number that were on sale at the start of December when interest rates started to rise.

Let's return to the movements in the value of the pound.

In early trading the pound had dropped back 0.95% against the dollar to $1.0634 following the International Monetary Fund's criticism of the UK's mini-budget.

But by 10:00 UK time sterling had recovered some ground to $1.0689 dollars.

While many commentators say this morning's dip was due to markets reacting to the IMF's warning, it comes against the backdrop of a strong dollar.

The US dollar index– which reflects how the dollar is moving against a basket of six other currencies - rose around 0.5% to hit a new high of $114.78.

Sterling briefly collapsed to a 37-year low of $1.0327 on Monday following Chancellor Kwasi Kwarteng's mini-budget on Friday.

Economist Julian Jessop has warned that there is a risk the UK economy could end up in a "doom loop" of failing currency and rising interest rates, but stresses he believes recent movements on the stock markets have been an overreaction.

"I think it is correct to be concerned about the fall in the pound and the rise in long term interest rates," Jessop says.

"There is a risk that we do end up in a doom loop of a falling currency, rising interest rates and weaker growth which obviously would undermine the agenda of the new government.

"But I also think that people have overreacted in the last few days," he adds.

Jessop is the former chief economist at the Institute for Economic Affairs think tank and offered informal advice to now-Prime Minister Liz Truss during her leadership campaign.

He says the cancellation of tax increases and the energy bills freeze announced by the government are measures he would expect the International Monetary Fund - which has openly criticised the government's tax cutting policies - to welcome.

Global ratings agency Moody's has warned the UK government that unfunded tax cuts could lead to larger budget deficits and higher interest rates.

It said it was no longer expecting UK economic growth to return fully until 2026, before cutting its forecasts for real GDP growth next year to 0.3% from 0.9%.

Moody's said in a statement: “Large unfunded tax cuts are credit negative.”

It comes after Liz Truss's government set out its mini-budget, which included significant tax cuts, such as abolishing the 45% tax rate for top earners, on Friday.

There were no borrowing figures presented with the mini-budget or a clear explanation of how the tax cuts would be funded.

Moody's went on to add that unfunded tax cuts will “lead to structurally higher deficits amid rising borrowing costs, a weaker growth outlook and acute public spending pressure stemming from the pandemic and a decade of austerity”.

The Liberal Democrats have accused the government of being "blinded by ideology", as it called for Parliament to be recalled to address the market turmoil that has followed the mini-budget.

"Truss and Kwarteng have been in government for three weeks and the IMF has already been forced to issue a statement on their reckless economic policy," Treasury spokesperson Sarah Olney says.

"Both are totally blinded by ideology, which is making millions across the UK suffer.

"We need to recall Parliament to fix this mess."