The pension funds of millions of working Scots were on the verge of being wiped out by Kwasi Kwarteng and Liz Truss’s uncosted tax cuts for the rich, it has been reported.
The massive scale of the financial crisis that forced the Bank of England to intervene in the money markets to shore up UK pensions schemes became apparent on Wednesday.
Respected Sky News economics editor Ed Conway said he had been told pension funds were on the imminent brink of insolvency, which pushed the Bank of England to act.
Millions of working people and businesses have money in pension funds which will pay out a guaranteed sum on retirement which could have all been lost.
The Bank announced on Wednesday that it would buy government bonds (otherwise known as gilts) on a temporarily basis, to bring order back into the market.
Had the Bank of England not moved the UK would have seen a run on pension funds that would dwarf the collapse of Northern Rock bank which sparked the 2008 banking crisis.
Conway tweeted: “Am told the BoE were responding to a “run dynamic” on pension funds - a wholesale equivalent of the run which destroyed Northern Rock.
"Had they not intervened, there would have been mass insolvencies of pension funds by THIS AFTERNOON.”
NEW
On the @bankofengland intervention:
Am told the BoE were responding to a “run dynamic” on pension funds - a wholesale equivalent of the run which destroyed Northern Rock.
Had they not intervened, there would have been mass insolvencies of pension funds by THIS AFTERNOON.— Ed Conway (@EdConwaySky)
The bank feared that investors withdrawing from pension funds would develop into run that would have seen a wholesale flight of finance from pension funds which has never been seen before.
Amid calls from the opposition parties to recall parliament and for Liz Truss and chancellor Kwarteng to abandon their tax-cutting budget for the rich, Tory MPs began turning on the Prime Minister.
Simon Hoare MP accused Truss and Kwarteng of “inept madness” as the financial turmoil sparked by last week’s mini-budget continued.
He compared the economic meltdown to Black Wednesday in 1992, when interest rates soared and Sterling fell out of the European Exchange Rate Mechanism.
Another Tory MP, Robert Largan, said it was a “mistake” for Truss to abolish the 45p top rate of tax — the most controversial measure in last Friday’s mini budget.
But there were no signs of a u-turn or a resignation from defiant chancellor Kwarteng and Truss who has maintained a silence on the issue all week.
To sign up to the Daily Record Politics newsletter, click here.
READ NEXT:
Body*
