Pound holds steady after Fitch drops UK credit outlook to 'negative' - live updates




  • In Business
  • 2022-10-06 05:29:57Z
  • By The Telegraph
Fitch is the latest credit agency to express concern about Government debt - BLOOMBERG
Fitch is the latest credit agency to express concern about Government debt - BLOOMBERG  
  • Income taxes to rise by £21bn despite Budget cuts

  • FTSE 100 closed at 7,052.62 on Wednesday, FTSE 250 at 17,562.42

  • Dow Jones closed at 30,273.87, S&P 500 at 3,783.28

  • Ben Wright: Brace yourself for more nasty surprises from the financial world

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Fitch has become the latest ratings agency to lower the credit outlook for British government debt to "negative" from "stable".

"The large and unfunded fiscal package announced as part of the new government's growth plan could lead to a significant increase in fiscal deficits over the medium term," Fitch said last night.

Fitch maintained its "AA-" credit rating for Britain, which is one notch lower than S&P's.

This morning, the pound is up slightly against the dollar at just above $1.136, a narrow improvement on last night's close at $1.1349.

It comes after sterling fell to a record low against the US dollar last week and some British government bonds tumbled by the most in decades, forcing the Bank of England to step in to stabilise markets.

Follow the latest updates below.

06:29 AM

Kwarteng summons bankers to Downing Street in mortgage row

The Chancellor has summoned bank chiefs to Downing Street after turmoil in the mortgage market sent rates to a 14 year high and triggered a wave of deals being pulled, Melissa Lawford, Patrick Mullholland and Szu Ping Chan write.

The average rate on a two-year fixed-rate mortgage is now 6.07pc, according to Moneyfacts, the first time the average rate has exceeded 6pc since November 2008.

Lenders withdrew a record number of deals following the mini-Budget after wild swings on currency markets and a big sell-off of British government gilts.

Between September 23 and October 1, the number of available mortgage deals fell by 43pc - a loss of 1,703 products.

Read more: Mortgage rates soar past 6pc for first time in 14 years

05:56 AM

Dollar climbs as pound's surge is halted

The dollar fought for a footing in choppy trade on Thursday, with support from upbeat US data.

The dollar rose 1pc on the euro and 1.3pc on sterling overnight and was trying to hold those gains in bumpy early trade in Asia.

The euro has now made two unsuccessful attempts to regain parity this week and last bought $0.9916.

Sterling's rebound from record lows has paused just below $1.14 this morning.

05:36 AM

Musk's deposition postponed

Elon Musk and Twitter have agreed to postpone the billionaire's deposition scheduled for today, according to a report.

The parties are trying to reach an agreement to end their litigation and close Musk's $44 billion purchase of the social media company.

Musk had been due to be deposed today as part of that litigation but Reuters reported a source as saying this has now been put on hold.

It comes as anti-hate speech campaigners, who fear Musk will loosen Twitter's moderation, warn that the platform could be bad news for persecuted groups. Read the full story here.

Elon Musk - REUTERS
Elon Musk - REUTERS  

05:29 AM

Good morning

The Treasury will impose an additional £21bn of income taxes despite Liz Truss's "tax-cutting" mini-Budget, a detailed analysis released on Thursday has revealed.

The average household will be £1,450 per year worse off as a result of the stealth raid, according to the Institute for Fiscal Studies (IFS) think tank.

The typical basic rate taxpayer will pay an added £500 in income tax and National Insurance per year by 2026 while higher rate earners are facing a £3,000 annual increase.

5 things to start your day 

1)  Mortgage rates soar past 6pc for first time in 14 years as Kwarteng summons bankers The Chancellor summoned bank chiefs to Downing Street after turmoil in the mortgage market triggered a wave of deals being pulled.

2) Treasury set for £21bn income tax boost despite mini-Budget cuts The average household will be £1,450 poorer per year as a result of the stealth raid, according to the Institute for Fiscal Studies.

3) Ad-free Google rival to launch in the UK Founder of Neeva claims Google is abusing its dominance of internet search engines.

4) Elon Musk's free speech vision for Twitter at risk from Britain's 'purse-lipped puritans' Anti-hate speech campaigners 'fear for a Musk-owned Twitter'

5) Ben Marlow: Ukrainian heroics are testing the strength of the oil cartel What these major territorial advances mean for Opec is yet to be determined.

What happened overnight 

The dollar rose 1pc on the euro and 1.3pc on sterling overnight. All three main indexes on Wall Street ended in the red, though they managed to claw back most of their earlier losses thanks to a late rally.

Asian markets were mixed as this week's global rally ran out of juice: Tokyo, Singapore, Seoul, Taipei and Jakarta all rose again, but Hong Kong retreated after leaping almost 6pc higher on Wednesday. Sydney, Wellington and Manila were also slightly lower.

Coming up today

  • Economics: Construction PMI (UK), retail sales (EU), jobless claims (US), factory orders (Germany).

  • Corporate: Imperial Brands, Chemring, CMC Markets, Ferrexpo, R S Group (trading statements); N Brown (interims); Volution (full-year results).

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