The Bank of England has warned of a "material risk" to the UK's financial stability after being forced to buy up more government bonds.
The central bank increased the number of bonds it was buying on Monday, as part of a scheme that ends on Friday.
That saw government borrowing costs rise sharply and a downturn in the markets, and the bank has once again been forced to step in as it announced it would buy a greater range of bonds to "restore orderly market conditions".
It warned: "Dysfunction in this market, and the prospect of self-reinforcing 'fire sale' dynamics pose a material risk to UK financial stability."
Read More: Employment rises in Scotland but experts warn of labour shortages and real pay falls
Uncertainty over the bonds has led to fears for British pensions, but the deputy Prime Minister has moved to assure people.
Therese Coffey said on BBC Breakfast: "I’m absolutely confident pensions are safe, the Bank of England is independent and undertaking its role in trying to bring some stability, which it had done.
“I’m not aware of the details of exactly what’s happened this morning. The short briefing message I’ve had from Treasury is that it’s a technical financial stability.”
The move by the Bank of England has led to renewed criticism of the 'mini-budget unveiled by Kwasi Kwarteng.
The Chancellor has already been forced to bring the date of his fiscal plan forward by three weeks to October 31, and his handling of the economy has again come under fire.
Shadow chief secretary to the Treasury Pat McFadden said: “That the Bank of England has been forced to step in for a second day running to reassure markets shows the Government’s approach is not working, and creates renewed pressure for the Chancellor to reverse his Budget.
“This is a Tory crisis made in Downing Street, being paid for by working people.
“They have lost all credibility and control and they must respect our nation’s independent institutions, go back to the drawing board and reverse this damaging Budget.”
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel