UK Business Secretary Jacob Rees-Mogg yesterday claimed market turmoil is not linked to the mini-Budget in which the Chancellor Kwasi Kwarteng announced big tax cuts without the usual analysis of the economic impact.

He said volatility was "more to do with interest rates than a minor part of fiscal policy".

Mr Rees-Mogg added that the Bank of England had not raised rates as fast as the US.

But economists and some MPs said the Chancellor's plans had worried investors, pointing to the surge in borrowing costs.

The BBC says investors are often wary of putting money into countries that are increasing their debt.

After the mini-Budget, the pound plunged and government borrowing costs surged.

Lashing out

Meanwhile, the Bank of England has lashed out at fellow City regulators.

In a report released yesterday, Threadneedle Street suggested that the Financial Conduct Authority and The Pensions Regulator (TPR) had failed to crack down on risky investment strategies that left retirement funds exposed to ructions in the bond market.

The Bank said that TPR was responsible for overseeing the schemes that had fallen into turmoil.

The next meeting of the Bank's monetary policy committee is on November 3. Financial markets expect the committee to raise its base rate from 2.25% to 3.25% at that meeting - the biggest rise since Black Wednesday in 1992.

However, analysts still expect the pound to fall further against the dollar over the rest of the year.

Jordan Rochester, at Nomura, said sterling is on track to fall in value to less than $1 over the next two and a half months due to the high risk of recession, Britain's large trade deficit and the possibility of a serious crunch in energy supplies.

FTSE 100

The UK's top share index, the FTSE 100, was down 26 points at 6,799 shortly after opening this morning, following yesterday's 59-point loss.

Brent crude futures were down just a fraction at $92.39 a barrel.

Companies reporting today

  • Full-year trading statement: easyJet
  • Q3 trading updates: Entain, Hays

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