(Bloomberg) --
Chancellor of the Exchequer Kwasi Kwarteng vowed to stay the course on his economic strategy in the face of a market selloff that sent the pound to a record low against the dollar.
“I’m confident that with our growth plan and the upcoming medium-term fiscal plan -- with close cooperation with the bank -- our approach will work,” Kwarteng told a meeting of leading financiers on Tuesday, according to a readout from the Treasury. “We are committed to fiscal discipline.”
The chancellor’s remarks show how the UK government is continuing efforts to reassure investors after twin statements from the Treasury and Bank of England initially failed to arrest the market turmoil that followed on from Kwarteng’s fiscal statement on Friday, the biggest tax giveaway in half a century.
However, UK assets showed signs of stabilizing on Tuesday, with the pound headed for its biggest rally in months and UK bonds recovering ground after the historic selloff.
Kwarteng later held a call with Tory Members of Parliament, including some ministers, in an effort to alleviate party concerns about sterling.
His key message to MPs was to hold their nerve on the planned tax cuts, while he said gilts, their price and their cover rate were his key metrics for judging market reaction, according to two MPs on the call. He added that he understands voter concerns about mortgage rates rising and told lawmakers that childcare costs are a drag on the economy.
Kwarteng told the meeting of city chiefs that he will set out more supply-side reforms in the coming weeks and deliver on his “top priority” of liberalizing financial services. He vowed to “sort out” Solvency II rules governing insurers and make the UK’s financial regulators more “nimble.”
“We need to get the city and the UK back to where it always has been - the world’s foremost financial center,” he said. “There’s lots we can do in the financial services space to liberalize regulations that will drive economic growth.”
Attendees at the meeting included Fidelity International Chief Executive Officer Anne Richards, Legal & General Group CEO Nigel Wilson and Aviva Investors CEO Mark Versey.
(Updates with call to MPs in fifth, sixth paragraphs)
©2022 Bloomberg L.P.
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