.— bank of england. ngland. yes, absolutely. and that is because _ bank of england. yes, absolutely. and that is because the _ bank of england. yes, absolutely. and that is because the plan - bank of england. yes, absolutely. | and that is because the plan looks shambolic. the plan is 45 billion in tax cuts, and this giants borrowing, so the tax cuts, let's be clear, these are going to benefit only the 0.1% top of the population. so that 0.i% top of the population. so that some 50,000 people who will get two thirds of the benefits of these tax cuts. the reason the market is reacting this way, let's be clear, the market is freaking out about the uk. some people, one investment bank was saying that investors look at the uk right now as a doomsday cult. others have said that the uk economy looks like in emerging markets, not to because it is in emerging markets, obviously it has emerged, but because it is very hard, it is going to be very hard for policymakers to regain credibility and trust in the economy.

the bank of england is now in the market. in theory this ends qed because it's not designed to lift inflation. this is a financial implement we are seeing here. it's recommended. the bank of england is in the market. it's pledging unlimited purchase and it's going to do it and kick it there it's going to create new reserves to do it. i thing the argument there gets a bit nuanced. what you've got is 100 basis points off the 30 but that takes us back a few days to where we were. a huge climb we see in long and yields, the consternation for the pension fund industry. i want to show you a couple of charts. the british pound has not reacted very much today. there is still an expectation the bank will have to step in and raise rates. the former mpc member thinks you see a monetary response policy here north of 100 basis points and ultimately at 107 maybe the market signal that. i want to show you this is the other area, certainly an area focused with a lot more attention over the last few days. swaps of dropped really sharply. we've

growth-focused goal of liz truss, is it fundamentally at odds with the inflation-fighting mission of the bank of englandt: i would agree that there is a bit of a schizophrenic existence right now between the government and the bank of england. the bank of england is indeed independent, although there have been some hints during their campaigns for deciding the new tory leader, that liz truss was questioning the independence of the central bank, or at least some aspects of it. now, that independence is very important, and of course, the remake that is given to them by the government, by the chancellor, is to keep inflation at 2% target if they can. now, of course, the target has been hugely exceeded in reality. we have 10% inflation or thereabouts. but it is not dissimilar to what is happening in the u.s. and in quite a lot of other countries, including the continental europe overall. so the ecb is also having this particular problem. in fact, if you look at countries in europe, particularly those bordering russia, we have inflation of over 20% for quite a few months now so there is no doubt that we have

the bank of england is carrying out temporary purchases of long dated u.k. bonds. we were waiting for killed sales from the bank of england. they deleted -- delayed the starts. >> that works great, john. this is brilliant. the afterthought is going as liz truss. >> if you're just tuning in, the bank of england carries out temporary purchases of long dated u.k. bonds. it is down on a 30 year by 22 basis points on the back of it. bonds are searching. sterling is sort of doing ok, but lisa, what are we talking about? they went through some form of qt. it can't do a rolloff because the average maturity in the bond market is 15 years. they're not absolutely abandoning that, but they're delaying that. that is in october, and i wonder what is next. >> just from a market response, the pound has given any gains up immediately after that announcement. one of six. it gives a sense of the market response. it's not going to do that. this goes to the credibility issue. they basically said, there is going to be a question about whether the central bank has the conviction given the

is it funded mentally at odds with, with the inflation fighting mission of, of the bank of england. but i would agree that there is a bit of as gets a funding existence right now between the government and the bank of england. the bank of england isn't data you rightly say independent, although there had been some hence during the campaigns for deciding the new tory leader, the less trust was questioning the independence of the central bank. are some aspects of it. now that independence is very important, but of course the limits of the have which is given to them by the government, by the chancellor is to keep inflation at 2 percent target if they can. now of course i target has been hugely exceeded in reality in the sense that we now have 10 percent inflation of thereabouts. but it's no dissimilar to what's happening in the us, what's happening and inquire about the countries, of course, in continental europe or also the c b. he's also having this particular problem. in fact, if you look at some of the countries in europe, particularly those that are boarded in russia, we've had in

>> in a statement, the bank of england said the bank is monitoring developments in financial markets sely in light of the significant repricing of financial assets. the re of monetary policy is to ensure demand does not get ahead of supply in a way that leads to more inflation over the medium-term. the mpc will not hesitate to change its rates by as much as needed to the 2% target sustainably in the medium-term. i spoke to a market analyst about her assessment of the situation. >> certainly, there has been real nervousness across financial markets because of this worry, because these tax policies, it means they are inflationary, will push up demand in the economy. that will force the bank of england to increase interest rates much more sharply. that is causing real jitters across the housing market in particular. housebuilding shares have fallen back. there are real worries about the number of mortgage holrs who are on two-your fixed deals that will run out next year. actually, they took those mortgages out when rates were at 0.1%. they are forecast to shoot up to close to 6%. you can

you saw that bond buying from the bank of england. tructural buyer of that size in the marketplace, it does raise the prices of those uk government bonds, lowering the yield. so that has been the direct implication there. if you take a look at some of the moves within the currency side of things, there is this sense among some traders -- and this is what they're talking about -- there was some intraday volatility and a lot of that has to do with positioning of order books in the foreign currency markets right now around banks and whatnot. we saw a big spike, a fall and we're moving lower again the idea here is if there's any kind of stability to the british pound given the announcement that we saw, that may or may not be a good sign of things to come over the last year, record lows for the british pound against the u.s. dollar. keeping an eye on whether or not those headlines from the bank of england will provide any kind of stability. it seems as though for now we're holding. we'll keep a close eye on that also the implications around

of the bank of england effectively _ money. of the bank of england effectively taking _ money. money. of the bank of england effectively taking money out i money. of the bank of england effectively taking money out of| money. of the bank of england - effectively taking money out of our pockets with the interest rate rise per than potentially getting more money into her pockets tomorrow with these tax cuts that we are going to hear from the chancellor?- these tax cuts that we are going to hear from the chancellor? when you talk to the economists _ hear from the chancellor? when you talk to the economists earlier - hear from the chancellor? when you talk to the economists earlier on - hear from the chancellor? when you talk to the economists earlier on on | talk to the economists earlier on on that very point. find talk to the economists earlier on on that very point-— that very point. and people being su ueezed that very point. and people being squeezed through _ that very point. and people being squeezed through the _ that very point. and people being squeezed through the bank -

still nothing from the bank of england. alix: i am struggling to understand, particularly after hitting 1.03 overnight. in the u.s. things are confusing as well. first of all you have higher yields. in some ways it is no surprise because we have such a downdraft last week so the debt may be bouncing. the other side is you had a lot of volume coming into the market on friday, which could have helped to stop. it is hard to see sustained upside with yields pushing so much higher and you have the stronger dollar. two of these together, you have to wonder how much you have to rewrite 2023 earnings and how much of recessin on what the bond market and the dollar are telling you guys. guy: i do feel the action is certainly in london. the market route which we begin friday after the announcement of the new fiscal measures, those measures are beginning to unnerve conservative lawmakers. some are saying the bank of england may need to step in and rescue the country from what is happening. is there going to do that? what are the options

many in the next few days, very briefly have you ever seen this kind of disagreement between the bank of england and, and the government of the you k very briefly, if you can. no. and what we've seen is actually the treasury is kind of been telling the central bank governor what to do the statements read. is it the treasury? but some point the monetary policy committee is going to get in there and say, hang on those, we need to do something with the bank, getting the treasury contradiction with each other, and that's not workable. this is going to have to change. this is disastrous, or i want to leave it there. david blanche flower, he's professor at dartmouth college and former member of the bank of england. thank you so much. cool. thank you. let's go over now to our financial correspondent in new york. yes quarter. you heard perhaps what david just said there yet, but it's not just in england that this shock is being felt also in new york. what can you tell us the, i mean a general and for the moment at least it does seem to be mostly a british problem, but that could definitely a chain. so i

if i were at the bank of england out be seeing things in the same way. what central banks have used in the last 10 years. persistence of inflationary pressures we have at the moment. so the monetary policy committee falls back on their judgment. >> let's talk about the pound. what would that look like, how big would the response have to be for the bank of england. we just had a currency strategist on talking abut a move down from 105 potentially on the cable rate. do think they're paying more attention to the pound as well? >> some members of the committee are paying attention to what's happening with the pound. and of course depreciating currency has a direct impact on inflation. dynamics are clear. they vary from time to time. no one would think an exchange rate would help bring inflation down. >> how high will rates have to go. >> the market is suggesting the bankrate getting closer to 5%. i think that's really anybody's guess. you may well be moving back to a world where interest rates are higher. >> is this change of language in the boe guidance dema

bank of england. e bank of england. butt— independent monetary policy run by the bank of england.— independent monetary policy run by the bank of england. but on a day of seesawin: the bank of england. but on a day of seesawing government _ the bank of england. but on a day of seesawing government borrowing i seesawing government borrowing costs, these are huge moves by the standards of this ordinarily car market lending over two years. and rates did go up again as the pm stock to her guns, but then they settled. however, this is what it looks like over the past week, a significant and rapid rise that is now working its way into the borrowing costs of companies and for mortgages, too. we have a stand—off between the government in westminster and the markets in the city, and how that works out will determine when this interest—rate shot ends, or if it is prolonged and worsened. and what we learned from the government today is that despite everything we have seen over the past week, that in their view, t

she said they are working closely with the bank of england. this is a statement the treasury put out yesterday. the treasury and the boe are now having daily beatings. yesterday, the treasury emphasizing the independence of the bank of england. some more lines from liz truss in this interview saying we are putting the country on a better trajectory for the long-term. the prime minister speaking in a bbc interview, saying growth won't come overnight for the u.k. the government had to take decisive action, and she is prepared to take controversial decisions. let's get straight to our very own lizzy burden, who is outside the bank of england. thanks so much for joining us, we had these lines from liz truss saying the u.k. is facing very difficult economic times. this does not sound like a prime minister who will back off of the policy she has set forth. lizzy: and that's the same message her junior ministers have been giving in broadcast interviews. truss digging in and resisting calls to sack kwasi kwarteng. he is a close personal friend and her

lisa: there's also disunity with the bank of england versus the government. ere is some pricing in the market of the bank of england meeting in between meetings and raising rates to stave off some of the kleins we have seen in sterling. what is your view on how the government would respond to that? lizzy: definitely all eyes on the bank of england. the government welcomes if the bank of england steps into save the currency. you talked about how much the pound has tanked as a result of kwasi kwarteng announcing how much packages would be in the pipeline. before those moves an analyst at deutsche bank was saying bank of england needs to step into regain the ability in the situation. it is 160 five basis points of hikes in november which implies we will get an intro meeting hi. it is difficult for andrew bailey because he does not want to be seen to be responding to fiscal policy more than inflation. the other question is are they going to put the brakes on active gilt sales, which raises the same dilemma. jonathan: lizzy burden, thank you. we will cover the cons

the bank of england steps in to try to calm the financial markets after the government's tax cutting plans caused the pound to slide. the bank said it had to act because of the material risk to uk financial stability. as the fallout continues from friday's mini budget, nearly a thousand mortgage products were withdrawn overnight. the treasury said this lunchtime it will continue to work closely with the bank in its work around financial stability. an investigation by the bbc�*s panorama programme has exposed what is described as a toxic culture at one of the uk's largest mental health hospitals. the eu says leaks into major gas pipelines from russia to europe are the result of sabotage. the uk must prepare for a big wave of flu this winter, say health experts, as people are urged to get flu and covid vaccines. and the spotlight is on glasgow and liverpool, as they vie to host next year's eurovision song contest. and coming up on the bbc news channel, england's women will play their first ever stand—alone fixture at twickenham next year. theirfinal six nations match against france will

emergency action by the bank of england to try to bring much—needed stability to the financial marketsthe bank steps in after a collapse in the pound, and a sharp increase in the costs of government borrowing, but ministers say last week's mini budget was on the money. we think they're the right plans, because those plans make our economy competitive. at the end of the day, that's ultimately what we have to do. what we politicians are responsible for is making the economic decisions that will drive continued growth. overnight, more than 900 mortgage products were withdrawn. labour says the government's mishandling has led to the crisis. the government has lost control of the economy, and that is self—inflicted, sometimes there is an economic crisis because of world events that can't be predicted. this is self—inflicted, in downing street, with that budget. we'll have more on the bank of england's emergency intervention, and whether it's likely to work. also on the programme. an investigation by bbc panorama exposes what's described as a toxic culture at one of the uk's largest mental h

we'll have more on the bank of england's emergency intervention, and on the government's refusal to change tack. also on the programme.. inside one of the uk's largest mental health hospitals, a bbc investigation uncovers mistreatment and cruelty. the british—iranian nazanin zaghari—ratcliffe has cut her hair in solidarity with iranian women, whose rights are under attack from religious rulers. and the latest from florida, where hurricane ian, one of the worst storms in the state's history, is set to devastate wide areas. coming up in the sport, it is a low scoring affair, but england lose in lahore, as pakistan take control of the twenty20 series with a six run win. good evening. faced with growing alarm on the financial markets about the government's economic strategy, the bank of england has been forced to take emergency action to try to stabilise things. last week's widely—criticised mini budget unveiled by the chancellor has been followed by a collapse in the pound and a sharp increase in the costs of government borrowing. earlier today, the bank of england said it would intervene in

so, a lot of pressure in the bank of england _ so, a lot of pressure in the bank of england and thisjustthis just adds to it, so, a lot of pressure in the bank of england and thisjust adds to it, i think— england and thisjust adds to it, i think today. let's look at the ft because they are talking about the rise that they've already announced been hinting at a big rise in november. it is pretty clear that interest rates are going to keep going up but we have historically had low interest rates in this country since the financial crisis of 2008 for very long time, people of gotten used to the low interest rates and cheap money. used to the low interest rates and cheap money-— used to the low interest rates and chea mone . , ., ., ., cheap money. they have and it would seem that we — cheap money. they have and it would seem that we may _ cheap money. they have and it would seem that we may not _ cheap money. they have and it would seem that we may not have - cheap money. they have and it would seem that we may not have that - cheap money. they have and it would seem that we may not have th

emergency intervention — the bank of england says it will spend billions buying up government bonds —ff a pension fund collapse but there's chaos in the uk housing market as hundreds of mortgage products are withdrawn. also coming up... into the financial fast lane — porsche gears up for a massive stock market debut. but is it the right time? as you've been hearing, the uk government says it's sticking to plans for £45 billion of tax cuts — despite turmoil on financial markets since the chancellor's mini budget statement on friday. it's seen investors dumping the pound — and uk government borrowing costs soaring on growing alarm about the country's finances. on wednesday the bank of england was forced into an emergency intervention to head off a pension—fund crisis. it will spend billions buying up uk government bonds to prop up their value and keep borrowing costs down. but as our economics editor faisal islam explains, it's only a short—term solution. what started as an attempt to grow the economy with the biggest tax cuts in half a century led to havoc on currency markets — more im

for the first time, the entire bank of england collection will be made of polymer. , the new plastic notes get a mixed reception. so, there are a bit slippery? there are a bit slippery. they quite, yeah, difficult to keep hold of, really. yeah. notjust because you're spending them? no. yeah, feels a little bit cleaner and a little bit less concerned about it ripping in my pocket. i'm not sure, but the plastic one looks to be much- better and very smooth. and i think i probably would like the plasticj one than the paper one. if you find you still have some paper banknotes after friday's deadline, you can queue here at the bank of england, at your own bank, or at some post offices to exchange the old notes. kevin peachey, bbc news. so, check the back of the sofa. as europe grapples with an energy crisis and fires up coal power stations, questions remain on how europe will eventually transition to green energy. this week the european commission's biggest event dedicated to energy efficiency and renewable energy, the european sustainable energy week takes place — culmina

i have sympathy for the bank of england. overnment, which means that in their mind, the bank of england know that the rate of interest they must set must be around 6% but they know that if they do that, then we willjust break the housing market and it will create untold pain in the hearts and minds of britons out there who fight —— have indebted themselves so massively over the last decade also. they are damned if they do and damned if they don't. this mini budget has been a disasterfor damned if they don't. this mini budget has been a disaster for the bank of england. they bought some time with their reversal of quantitative tightening, buying gilts effectively, again, quantitative easing again, but they will have to push interest rates up and they will have to push them very fast in a way that is going to create a lot of unnecessary damage. the good news is that... from the british perspective, is that the united kingdom is not greece. you issue the currency in which you borrow your money and that is a great advantage to ha

the bank of encland england here in britain. the bank of england have _ england here in britain. d have had to _ england here in britain. the bank of england have had to bail— england here in britain. the bank of england have had to bail out- england here in britain. the bank of england have had to bail out your i england have had to bail out your decisions yesterday. they've had to step in. the international monetary fund have said that they don't think what you've done is a good idea. is it time to reverse what you've done, bearing in mind what you've seen over the last few days? ida. bearing in mind what you've seen over the last few days?— over the last few days? no, it isn't, because _ over the last few days? no, it isn't, because the _ over the last few days? no, it isn't, because the vast - over the last few days? no, it i isn't, because the vast majority over the last few days? no, it - isn't, because the vast majority of the package we announced on friday was the _ the package we announced on friday was the support on energy. the local radio round is a tradition for party

the bank of england signaled a significant rate hike is in the pipeline and the bank of england looks confused and that it looks beholden to the fiscal policy. in terms of what's next for the u.k. government, liz truss is under pressure for severe turn on -- which indicate she is not likely to change her mind. she is digging in but are we surprised? throughout the campaign she said she wanted to take on the treasury orthodoxy and now she is coming up against the market reality. >> we have just got a sound clip from the chancellor of the exchequer. i'm trying to figure out whether we've got it. i will play it for you in just a few minutes time. not good yet is the message i'm getting paid julian jessup, -- i'm getting. julian jessup, he joins us now. he's an independent economist. always good to talk to you and get a sense of what your thoughts are and what's happening here. i understand you haven't spoken to the prime minister since she entered downing street. if she were to call you up, what advice would you give her? >> first i would've said the overall strategy she's pursuing is ex

the independent bank of england here in britain. ritain. the bank of england have had to bail out _ britain. the bank of england have had to bail out your _ britain. the bank of england have had to bail out your decisions - had to bail out your decisions yesterday, the bank of england have had to— yesterday, the bank of england have had to step in, the international monetary— had to step in, the international monetary fund have said that they don't _ monetary fund have said that they don't think what you have done is a good _ don't think what you have done is a good idea — don't think what you have done is a good idea. is it time to reverse what _ good idea. is it time to reverse what you've done, bearing in mind what _ what you've done, bearing in mind what von've — what you've done, bearing in mind what you've seen over the last few days, _ what you've seen over the last few days, the — what you've seen over the last few days, the damage it has caused to the pound? — days, the damage it has caused to the pound?— days, the damage it

even a reassurance by the bank of england hasn't helped. also on our show, a small sigh of relief from beleaguered renters in the us apartment rent fall for the 1st month in almost 2 years. and a family bakery and germany shuts at stores after 90 years in business setting, rising prices. oh, welcome to our show. i'm steven busy in berlin. it's been a volatile year for currencies ask anyone holding yen rouble or career owes even bit coins. but that there is not the value of a crypto currency. you're seeing that the british pound, which fell monday to a record low against the us dollar. it's part of the market reaction to the so called many budget put forward by the new conservative government at the end of last week, which included some of the biggest tax cuts in 50 years. investors are not happy, and that's pushing up the cost of government borrowing to recent highs. or the bank of england's even wait in saying it's monitoring the developments in the financial part markets. and would not hesitate to change interest rates by as much as needed

as you say, pretty| massive market intervention by the bank of england. ic that's needed to stem the crisis of confidence or do you think it is a little more than a short—term sticking plaster? i think it is a short—term sticking plaster because we have seen the central bank of several countries over the years intervene. some of the older viewers will remember the black wednesday in the 1990s when the british pound exited from the exchange rate mechanism and there were several interventions by the bank of england on that day. this could be the beginning of another series of interventions and that's what the real concern is and the real uncertainty hanging over the gilt market and the british pound. all of the bank of england stated they will purchase a limited amount, that might be enough to prompt speculators and traders thinking of pushing around the market to think twice and perhaps move onto a different currency, some of the issues that the british pound and british government market is facing is a similar issue that other countries are facing in terms

the bank of england needed to stop that. announced the asset bond buying program that puts them at odds with the qt program announced by bank of england by the committee the reaction, you could say, was in line with what they expected. gilt yields dropped 100 basis points in trading yesterday. we saw support from the pound, but it is struggling since the overriding theme is one of confidence investor confidence in uk assets with the fiscal situation and deteriorating public finances outlook. >> a lot going on in england what is the next thing investors should look for? is there a next shoe that could drop here? >> reporter: i think there are two major data points. the first is the next scheduled bank of england meeting on november 3rd they are predicting 30 basis points of hikes. they delivered only 50 there is a pressure to deliver more the second date point is november 23rd. the second opportunity to announce the budget. there is some expectation they will comment more on how they reduce the debt-to-gtp profile tying in to

bank of _ finances. in terms of options for the bank of england _ finances. bank of england or - finances. in terms of options for the bank of england or the - the bank of england or the government, what are they? there are two thin . s government, what are they? there are two things that — government, what are they? there are two things that economists _ government, what are they? there are two things that economists are - two things that economists are calling for to happen. we heard the man who used to be one of the world's biggest bond traders, and he was saying that you have got one or two choices. either the chancellor has to change his plan so they appear more credible, or the bank of england has to call an emergency meeting. you can't do nothing. i contacted the bank of england this morning to ask if they would say anything today, or have an emergency meeting and i'vejust anything today, or have an emergency meeting and i've just heard back, anything today, or have an emergency meeting and i'vejust heard back, no comment. of course you would expect the

what does it mean for the bank of england? there was a note on friday before all these moves saying the bank would have to step in if it was going to regain credibility. you had a bank of england policy makers saying the rate will have to rise. that was before these moves. a former u.s. treasury secretary said the u.k. was looking to emerging markets. intraday -- the intro we can move -- intro week move from the bank of england is perhaps not likely. we are do to get more hawkish talk instead. the panic has already begun. dani: i have seen some people joke and say gbp, it is the great british peso, which i should say is offensive to the pace at which has gained not just against the pound but the dollar as well. great stuff as always, lizzy burden that labor party conference. -- lizzy burden at that labor party conference. italy will have its first female prime minister at the head of the most right wing government since world war ii. let's bring in francine lacqua who has been holding ground for us in rome. what do we expect no

we have seen the bank of en . land energy prices. we have seen the bank of englandy prices. we have seen the bank of england having to _ energy prices. we have seen the bank of england having to intercede - of england having to intercede because of the measures your government brought in on friday. this doesn't normally happen. we are workin: this doesn't normally happen. we are working very. — this doesn't normally happen. we are working very. very — this doesn't normally happen. we are working very, very closely _ this doesn't normally happen. we are working very, very closely with - this doesn't normally happen. we are working very, very closely with the i working very, very closely with the bank of england. the bank of england won an independent monetary policy and set interest rates. we have seen difficult markets around the world because of the very difficult international situation we face. what our government has done is we have taken decisive action first of all on energy bills, which is the biggest part of the package that we have put forward and i think t

bank of encland difference? well, from the bank of england which _ difference? basically _ difference? well, from the bank of england which basically says - difference? well, from the bank of england which basically says they l england which basically says they will not hesitate to increase interest rates, at the same they said they were going to make a full assessment of monetary policy in november. that reduces the probability, but it doesn't distinguish completely. there were going to get an emergency relief pack, will help? i think it will help stabilise in the near term, but steer in �* growth and steer in the outcome of growth and experience to inflation. and if experience to go by weigh... inflation. and if experience to go b weiah. .. ., , inflation. and if experience to go by weigh... - you inflation. and if experience to go by weigh... you oniiiiis inflation. and if experience to go by weigh... you the on liiiis inflation. and if experience to go by weigh... back you the on liiiis inflation. and if experience to go by v being? jack you the oniiiiis infl

this operation from the bank of england goes until the middle of october. fiscal dominance. us through that. how well do you think the bank of england can push back against it? carl: the bank of england, it can raise interest rates to a million percent if you want to to achieve the goal. it said what it wants to do and how it's going to do it, and i don't think it can roll down in terms of the government, there's the battle of the bank of england, whether the economy -- or not. more conscious of this more so than i am, that the fed gets -- restricts its independence. that on that day they yields will go to levels we can't contemplate. jonathan: there was a whisper in august and they try to address it. carl weinberg of high-frequency economics, thank you. there's conflict across the board and between the rest of the world, there is conflict within the united kingdom, within the u.k. between fiscal policy and monetary policy, there is now conflict within the central bank as they try to -- how do you preserve financial stability coming into the gilt market? high interest rates

bank of encland there. whatever the big -- bank of england does _ there. the _ there. whatever the big -- bank of england does the market _ there. whatever the big -- bank of england does the market is - there. whatever the big -- bank of| england does the market is charging the uk higher rates of borrowing. it has hit 5% today, the highest level in two decades. the reason that these further surges in borrowing costs are so important is that they are a barometer of the financial credibility of the government, one that transfers the shock from the markets into the economy and ratchets up the costs of the government passed �*s own plans. it is a message in numbers that the markets are not convinced the government will stick to its plan. the government will face a choice between a u—turn on its tax cuts, massive spending cuts or further market turmoil. andrew bailey and his team at the bank of england will have to look at how much the chancellor will borrow in deciding how high base rates will go. kwasi kwarteng told mps today he was sticking to his plan, des

inflation rising, requiring interest rate increases by the bank of england. e being a policy conflict between the treasury and the bank of england. >> let's get analysis from vicki young, who is at downing street. >> certainly, turmoil on the markets. what they are trying to do on number 10 and number 11 downing street is to convey a sense of calm, saying they are sticking to their growth plan, no u-turns, no suggestion the chcellor is going to leave his job. they are defending the budget on friday, which unleashed all of the reaction, saying they had to intervene on energy prices and that in itself will bring down inflation. they say you cannot put taxes up. no other country is doing that, so they say they were right to do that. pointing out there's a lot more to come with this package. government departments are being written to, to see if they can identify savings, spending cuts. we know all about those, don't we. there's also reforms coming. the problem is, when you talk to tory mp' like i've been doing all day, they say this is a little bit too late, this

the bank of england has stepped in i the bank of england has stepped in to buy £65 billion of governmentney says the reaction we have seen from the market is the result of the government not showing its workings and he says it has the potential to undermine the strategy for growth we were hearing about. the message of financial markets is that there is a limit to unfunded spending and unfunded tax cuts in this environment. and the price of those is much higher borrowing costs for the government and for mortgage holders and borrowers up and down the country. and, at some point, those higher costs of borrowing for everybody undoes the positive impact of any tax reductions or shorter term growth measures. there is no escaping it. it is a worrying time for people. hard to understand what is going on and you look at the immediate implications. what is needed now, what is the next step? what is needed now, what is the next ste - ? ~ ., what is needed now, what is the next ste? . ., ., what is needed now, what is the next ste - ? ~ . ., . what is needed now, what is the next ste-? . . ., . ,, s

of the bank _ investment. what do you make of the intervention of the bank of _ investment. what do you make of the intervention of the bank of englandhe bank of england is making today, and those words are used, those words are used, it would do whatever, almost misquoting mario draghi, we will do almost what is necessary to stabilise the situation by buying some of the government's in debt? i by buying some of the government's in debt? ., _ , ., in debt? i have sympathy for the bank of england. _ in debt? i have sympathy for the bank of england. they _ in debt? i have sympathy for the bank of england. they are - in debt? i have sympathy for thei bank of england. they are facing in debt? i have sympathy for the l bank of england. they are facing a high rate of inflation, which is not just a british phenomenon but a global phenomenon. and now a fiscal splashdown by this government, which means that in their mind, the rate of interest they must set must be around 6%, but they know that if they do that they will just around 6%, but they know that if they do that they willjust break they do that they willjust break the housing market, a

of the bank i future. sir charlie bean, former deputy governor of the bank of| deputy governor of the bank of england, we appreciateeaders would describe the — your mind? well, nhs leaders would describe the summer— your mind? well, nhs leaders would describe the summer months - your mind? well, nhs leaders would describe the summer months as i your mind? well, nhs leaders would l describe the summer months as more pressured than many winters they have known. leaders are concerned and we see an up stick in respiratory illnesses. trusts are watching covid in particular, we saw a 17% increase in covid admissions to hospital in the recent figures and that is higher in some regions. but there is the good news, we are not seeing covid translate into an increase in deaths or use of ventilation beds and we can protect ourselves against covid and the flu, through the vaccination programme. so the message is if you�*re eligible for a vaccination to get out there, get it booked in and protect yourself, yourfamily get it booked in and protect yourself, your family and the wider population. i yourself, your family and the wide

wednesday, the bank of england was forced to calm the markets. and was concerned margin calls would cause a guilt crash. i'm watching -- watching all of this and fold has been the former bank of england governor, martha kearney. >> there's been a lapse between today and when the growth might come. that's the first inconsistency. secondly, there was an undercutting of some of the institutions that underpin the overall approach, so not having an obr forecast. i think the government accepted the need for that, but that was important. working at some cross purposes with the bank in terms of short-term support for the economy. that's another challenge. and i think the third thing is what's left out of the budget, and it was a self-described mini budget, so maybe this is understandable, but the real measures that were going to drive the acceleration of growth that's necessary for the numbers to add up -- and of course we don't have all the numbers, so that leads to one last certainty and concern, which is maybe the way the numbers are going to add up is

these are set by bank of england — which is independent of the government.terest rates by 0.5 percentage points. it's now saying it won't hesitate to lift them further. here's a former deputy governor of the bank of england on his concerns. i would be worried, the bank and indeed the government have indicated that they are going to take the next decision in november and publish forecasts and so on at that point. the worry is that they may have to take action a bit sooner. next — let's hear from andy verity again on how much interest rates are likely to go up by and what that would mean. so, if you look at what has happened to interest rates recently, currently, 2.25%, the bank of england's official rate after going up by half a percentage point last week. 0n the markets now, they are saying, just as we heard from john there, that they won't be able to wait until december. the markets think that an emergency interest rate will be necessary, perhaps in the next week and that by the november they would have gone up to 4%, which is nearly double what they are no

the bank of england robabl question. the bank of england probably started _ question. started too _ question. the bank of england probably started too late - question. the bank of england probably started too late in . question. the bank of england - probably started too late in raising interest rates. they left the first rise until december and were quite slow, and have been quite slow in raising them since then. so we are not actually getting much downward pressure on inflation at the moment from interest rate changes. fin pressure on inflation at the moment from interest rate changes.- from interest rate changes. on the screens of this _ from interest rate changes. on the screens of this broker _ from interest rate changes. on the screens of this broker in _ from interest rate changes. on the screens of this broker in st - from interest rate changes. on the | screens of this broker in st albans, the impact of all of this already hitting the mortgage markets. fine hitting the mortgage markets. one lender's hitting the mortgage markets. que: lender's service hitting the

lisa: now, it's over to the bank of england and the rest of the world. it seems like overnight from the national bank, it is going to be hard to get a hawkish direction. i would argue it was not a 75 basis point rate hike. it was a change in the projection and outlook. at 7 a.m., the bank mainland has a very difficult situation. maybe 50 basis points, but markets seem to be thinking there could be some outside surprise. because of that incredible weakness we continue to see, this is between a rock and a hard place for governor bailey. they have one of the most difficult jobs. he has been out front and honest. how low are some of the projections for the economy in the years ahead? a: 30 am, initial jobless claims. i think we are going to take on more and more importance. especially after we heard from fed chair jay powell yesterday. they want these rates up. the faster the unemployment rate goes up, and a perverse way, the better for risk assets. but it means the fed can back away from their aggressive rate hiking. so far, we have not seen that. we have se