Summary

  • The government is preparing plans for major cost-cutting across departments to help balance the budget

  • The chancellor's plan for increased borrowing - announced last week - triggered instability in the financial markets

  • The Bank of England moved to calm financial markets - it will buy government bonds on a temporary basis

  • The pound tumbled to $1.0560 after the news - it has since recovered and is climbing again

  • Treasury minister Andrew Griffith insists the government's plan is the right one, and says all economies are seeing volatility

  • UK Chancellor Kwasi Kwarteng met with investment banks - telling them he remains committed to fiscal discipline

Live Reporting

Edited by James FitzGerald and Emma Owen

  1. What was in the mini-budget?

    It's worth reminding ourselves what was in Friday's so-called mini-budget.

    It contained a range of measures that new Chancellor Kwasi Kwarteng said were intended to kick start a “virtuous cycle of growth".

    They included:

    • A cut in basic rate of income tax to 19% from April 2023
    • The abolition of the 45% higher rate of income tax for England, Wales and Northern Ireland taxpayers
    • The reversal of the recent rise in National Insurance from 6 November
    • The cancellation of a planned rise in corporation tax from 19% to 25%
    • A freeze on energy bills at £2,500 a year
    • Rules which limit bankers' bonuses scrapped

    Read about the full range of measures here.

  2. Gloomy start to Asian market trade as pound bounces around

    Monica Miller
    Asia Business Reporter

    In early morning trade in Asia, the pound did not make much movement against the US dollar about 1%, bouncing between $1.07 to $1.06.

    Asian share markets slumped on Wednesday over fears that a global recession is near. The Nikkei was down 2.1%. South Korean stocks fell 2.4% to a two-year low. Chinese blue chips lost 0.6%.

    But the gloomy economic developments from the UK is having a knock-on effect in global markets.

    "Sterling’s sharp drop has dented market sentiment that has suffered from the Fed’s aggressive rate hikes, indirectly imposing downward pressure on emerging Asian currencies," Scotiabank's Qi Gao tells BBC News.

    "We remain bearish on the sterling and see rising odds of the pound and US dollar reaching parity in the weeks ahead."

  3. Analysis

    A stinging rebuke without precedent

    Faisal Islam
    BBC Economics Editor

    There is a lot that is remarkable about Britain's financial situation right now.

    Home movers telling us that between the mini-budget and today they had already lost multiples of their stamp duty savings, from massive increases in mortgage costs.

    Importers facing invoices increasing by thousands of pounds, which are worth little more than a dollar.

    The movements up and down by half a percentage point in the effective borrowing cost for British government debt are incredible.

    A sterling slump starting during a budgetary statement is the great terror the Treasury always fears, but never actually happens. Until now.

    But even I was taken aback by the International Monetary Fund's interjection, a stinging rebuke without a clear precedent.

    Read Faisal's full analysis here.

  4. Our main story

    Kwasi KwartengGetty Images

    More now on our top story. The International Monetary Fund (IMF) has openly criticised the UK government over its plan for tax cuts, warning that the measures are likely to fuel the cost-of-living crisis.

    In an unusually outspoken statement, the IMF said the proposal would be likely to increase inequality and add to pressures pushing up prices.

    Markets have already raised alarm over the plans, sending the pound plunging.

    The government says the measures will kickstart economic growth.

    Read more here.

  5. Welcome

    Welcome to our live coverage of reaction following the UK government's mini-budget on Friday.

    As you join us, the International Monetary Fund (IMF) has urged the government to "re-evaluate" its tax-cut plans - after describing the measures as badly timed and likely to increase inequality.

    The statement from the IMF has been described as a "stinging rebuke" by our economics editor - as allies of Prime Minister Liz Truss reject the IMF's words.