Chancellor Kwasi Kwarteng reportedly met with hedge fund managers for a champagne reception just hours after his mini-Budget.
The financiers are said to have egged on Mr Kwarteng to go further with his ambitious tax cutting plans – sparking fears that those present could have made money from the resulting crash in the value of the pound.
Following his mini-Budget on Friday, Mr Kwarteng said there was “more to come” in a Sunday interview. This hint at more cuts spooked the markets and likely contributed to the fall in the value of the pound when Asia trading opened on Monday.
Two hedge fund bosses have told associates that the chancellor was a “useful idiot”, according to a report in The Sunday Times.
One source said that guests at the drinks reception, which took place on the evening of 23 September, told Mr Kwarteng to “double down” on his radical tax cutting plans.
“He was high on adrenaline. His big thing was: ‘Look, we’re not going to do stuff incrementally. We really believe in this stuff and that’s what we’re going to do,” one source told the paper.
Calling for an investigation, the Liberal Democrats’ Sarah Olney said: “While struggling homeowners saw their mortgage bills spiral, it seems the chancellor was sipping champagne with hedge fund managers profiting from the falling pound.
The party’s Treasury spokeswoman added: “How out of touch can you get? We need an official inquiry into this now.”
However, a source close to the chancellor refuted any suggestions that financiers had any privileged knowledge from being at the party.
They said the claim was “total nonsense”.
“The government’s ambitions on lowering the tax burden are hardly a state secret,” the source added. “The growth plan published on Friday included a commitment to review our tax code to make it simpler, better for families and more pro-growth.”
One person familiar with the meeting told The Sun that the businessmen “were full of praise for his Budget and then egging him to go further”.
They added: “I mean, Jesus.”
It has previously been reported that Mr Kwarteng dined privately with a hedge fund investor and his former boss, Crispin Odey, during the leadership contest.
Mr Odey told the Financial Times this week that his bets against UK government bonds were the “gifts that keep on giving”.
In an interview with the Mail on Sunday, Mr Kwarteng admitted his mini-Budget had been done “at very high speed”, but said he was “100 per cent convinced that this was the right plan”.
The chancellor appeared to concede he was not good at “reading” market reaction. “It’s very difficult to actually anticipate how markets react to anything and if politicians were really good at reading markets, I suggest they probably would be market traders,” he said.
Mr Kwarteng added: “One of the things that really ruined my sleep is the markets. That sort of thing is trying.
“I’ve had difficult times reacting to what’s happening but you know, I am very confident that this is the right thing to do and I am a really, really great believer in Britain.”
Mr Kwarteng has been contacted for comment.
