UK’s Kwarteng tells city bosses he is confident his economic strategy will work

LONDON (Reuters) -British finance minister Kwasi Kwarteng told leading bankers, insurers and asset managers he was “confident” that his economic strategy would work, stressing the need for close cooperation with the Bank of England.

The pound touched an all-time low of $1.0327 on Monday and British government bonds sold off at a ferocious pace as investors lost confidence in Prime Minister Liz Truss’s new government following a fiscal statement from Kwarteng on Friday.

“I’m confident that with our growth plan and the upcoming medium-term fiscal plan — with close co-operation with the Bank — our approach will work,” Kwarteng said at the meeting, according to a readout provided by his office.

He said he was speaking to Bank of England Governor Andrew Bailey every day and that the two were working closely together.

“We have responded in the immediate term with an expansionary fiscal stance on energy because we had to,” he said. “With two exogenous shocks — Covid-19 and Ukraine — we had to intervene. Our 70-year high tax burden was also unsustainable.”

The government would not be reviewing departmental spending limits, last set out in 2021, he said.

He also spoke of his desire to loosen financial regulations.

“Big Bang 2.0 next month is a top priority of mine. We need to get the City and the UK back to where it always has been – the world’s foremost financial centre,” he said.

“There’s lots we can do in the financial services space to liberalise regulations that will drive economic growth.”

(Reporting by William James, editing by Andy Bruce)