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The government has ruled out a U-turn on the costly tax-cutting mini-budget and the chancellor will not resign despite mounting pressure.

It comes after a day in which the Bank of England was forced to launch a temporary bond-buying programme as it took emergency action to prevent “material risk” to UK financial stability.

Bank’s ‘nearly unthinkable’ intervention – economy latest

Sky’s political editor Beth Rigby was told that the chancellor, Kwasi Kwarteng, would not be resigning and that there would be “no reversal of policy”.

A minister told deputy political editor Sam Coates it was “bulls***t” to say that today’s market movement was related to the mini-budget announcement.

And on The Take with Sophy Ridge, chief secretary to the Treasury Chris Philp denied that the government had any responsibility and said there would be no change of course.

Politics Hub: No mini-budget reversal and chancellor will not resign

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‘We’re not going to change course’

The Bank will buy as many long-dated government bonds as needed between now and 14 October in a bid to stabilise financial markets in the wake of the mayhem that followed the government’s mini-budget last Friday.

In addition to the plunge in the value of the pound, it has also seen investors demand a greater rate of return for UK government bonds – essentially IOUs.

That is because the level of borrowing required to fund the government giveaway, including tax cuts and energy aid for households and businesses, shocked the market which immediately questioned the sustainability of the public finances.

City minister Andrew Griffith told Sky’s economics editor Ed Conway: “Every major economy is dealing with exactly the same issues.”

“They [the bank] have made a targeted and timely intervention in the market. That’s their decision, but they’ve done so working very closely with the chancellor.”

The Bank’s action comes after the International Monetary Fund added its voice to criticism of the growth plan.

Read more:
Ed Conway on the Bank’s extraordinary response
Liz Truss is a ‘danger to the economy’, Starmer says
Government departments asked for ‘efficiency savings’

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Govt sticking to ‘mini budget’ despite turmoil

What the Bank’s action is aimed at doing is tackling the consequences of rising bond yields, in this instance a liquidity crunch facing pension funds.

The pound fell back in response but bond yields did ease back from multi-year highs.

WHY THE BANK OF ENGLAND HAS ACTED


 Ian King

Ian King

Business presenter

@iankingsky

There are some very, very specific reasons why the Bank of England is intervening in this particular asset class in long-dated gilts – that’s gilts of a 20 to 30 year duration.

It affects traditional pension funds where a retiree is guaranteed a certain payout at their retirement based on their final salary when they retire.

Now, a lot of these funds use long-dated gilts as part of their investments and what has been happening over recent days is a lot of the investment funds have been asking pension funds to post more collateral – to put up cash.

It has been reported in The Times that actually these cash calls have been running into tens of billions of pounds since the beginning of the week because of this spike in long-dated gilt yields.

That is why the Bank of England is specifically targeting that with this gilt intervention.

It is aimed at seeing off a crisis that’s potentially starting to emerge in pension funds.

The Bank said in a statement: “Were dysfunction in this (long-dated bond) market to continue or worsen, there would be a material risk to UK financial stability.

“This would lead to an unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy.”

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Senior Tory blames mini-budget for turmoil

‘Significant’ interest rate rise likely ahead

The programme marked the Bank’s first policy intervention as it battles to bring down inflation and ease the cost of living crisis. Its chief economist signalled on Tuesday that a “significant” rise in Bank rate was also likely ahead.

The government’s growth plan is only seen as adding inflationary pressure to the economy, leaving it at loggerheads with the Bank’s mandate.

The Bank said the bond purchases, which would be fully covered by the Treasury in the event of any losses, would be sold back once market conditions had stabilised.

The announcement certainly had an immediate effect on the market.

Data showed that 30-year bond yields fell back to 4.3%, having risen to levels above 5% not seen since 2002 earlier in the day. There were similar falls for 20-year yields.

Those for 10-year bonds also fell back below 4% from 4.6%.

Stock markets, which had endured widespread falls Europe-wide amid recession fears, erased some of their losses.

The FTSE 100 had been almost 2% down but was just 0.8% lower on the day just before 1pm.

The pound, however, was a cent and a half down versus the dollar shortly after the announcement, to stand at $1.0578, and a cent lower against the euro. It later moved back towards $1.07 as market surprise at the intervention eased.

The single European currency was also suffering against a resurgent US currency.

Bank going ‘toe-to-toe’ with the market

The Bank said it would also postpone its efforts to unwind the sale of bonds it acquired through quantitative easing during the financial and COVID crises.

The Bank had planned to reduce its £838bn of gilt holdings by £80bn over the next year.

Neil Wilson, chief markets analyst at Markets.com, said the move followed evidence of “severe liquidity stress”.

This would have been particularly evident for pension funds who have faced demands for additional cash to cover off rising yields.

“We’re now seeing the Bank go toe-to-toe with the market and this might not lead to any decrease in volatility.”

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‘I was told this was a wonder drug but not warned about the deathly consequences’: 100 faces of infected blood scandal

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'I was told this was a wonder drug but not warned about the deathly consequences': 100 faces of infected blood scandal

“Losing Gary, my soul mate, was beyond painful,” says Kathryn Croucher, whose husband died aged 42 in 2010.

“Every day was a struggle dealing with the knowledge he was HIV and Hepatitis C positive.”

“Mum always said she was given a death sentence,” recalls Ronan Fitzgerald. His mother, Jane, died aged 54 after being infected with Hepatitis C when she was 16. “It was a ticking time bomb.”

Updates:
Scandal was ‘not an accident’
Follow reaction to report live

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The faces of the infected blood scandal.

More than 30,000 Britons were infected with HIV and Hepatitis C after being given contaminated blood products in the 1970s and 1980s.

Around 3,000 people have died as a result of the scandal, while many more still live under the shadow of health problems, debilitating treatments and stigma. Now, the findings of a public inquiry, first announced in 2017, will finally be published.

These are 100 faces of infected blood victims that either they, or their families, have shared with Sky News.

Click the images to read their stories.

Sky News will have full coverage of the infected blood report on TV, online and on the Sky News app today.

Infected blood inquiry Sky News promo image

Sky News would like to thank everyone who contributed to this project.

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Julian Assange wins High Court bid to bring appeal against extradition to US

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Julian Assange wins High Court bid to bring appeal against extradition to US

Julian Assange will be allowed to appeal against his extradition to the United States.

Two judges responded today to US assurances that Mr Assange will not face the death penalty – and can rely on the First Amendment right to free speech if he faced a trial for spying.

The WikiLeaks founder faces prosecution in the US over an alleged conspiracy to obtain and disclose national defence information after the publication of hundreds of thousands of leaked documents relating to the Afghanistan and Iraq wars.

WikiLeaks founder Julian Assange on the balcony of the Ecuadorian Embassy in London in 2017. Pic: Reuters
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WikiLeaks founder Julian Assange on the balcony of the Ecuadorian Embassy in London in 2017. Pic: Reuters

WikiLeaks founder Julian Assange in a police van after being arrested in London in 2019. Pic: Reuters
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WikiLeaks founder Julian Assange in a police van after being arrested in London in 2019. Pic: Reuters

Edward Fitzgerald KC, representing Assange, criticised the assurances of Joe Biden’s US administration at the hearing. He said: “Based on the principle of the separation of powers, the US court can and will apply US law, whatever the executive may say or do.”

He added most of the promises were “blatantly inadequate” – but they had accepted the promise about the death penalty.

In written submissions, the barrister said while the assurance over the death penalty was “an unambiguous executive promise”, the other assurance does not give “any reliable promise as to future action”.

The barrister added: “What needs to be conclusively removed is the risk that he will be prevented from relying on the first amendment on grounds of nationality.”

But James Lewis KC, representing the US government, insisted the “judicial branch of the United States will take due notice of this solemn assurance given by its government in the course of international relations”.

In written submissions, he said there is “no question” that Assange, if extradited, “will be entitled to the full panoply of due process trial rights, including the right to raise, and seek to rely upon, the first amendment as a defence”.

He later told the court: “The assurance does make it clear that he will not be discriminated against because of his nationality.

“He can and will be able to raise all those arguments and his nationality will not prejudice a fair trial.”

Today’s decision is the latest chapter in 13 years of legal battles and detentions for Australian-born Mr Assange.

A woman attends a protest outside the High Court on the day of an extradition hearing of WikiLeaks founder Julian Assange, in London, Britain, May 20, 2024. REUTERS/Maja Smiejkowska
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Supporters of Mr Assange have been gathering outside the High Court. Pic: Reuters

A police officers looks on near a placard outside of the Royal Court of Justice.
Pic: Reuters
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Pic: Reuters

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The US authorities want to put Mr Assange on trial over 18 charges, nearly all under the Espionage Act.

They claim his actions with WikiLeaks were reckless, damaged national security, and endangered the lives of agents.

During a two-day hearing in February, lawyers for Mr Assange asked for permission to challenge a judge’s dismissal of the majority of his case to prevent his extradition.

In March, Dame Victoria Sharp and Mr Justice Johnson dismissed most of Mr Assange’s legal arguments – but said unless assurances were given by the US, he would be able to bring an appeal on three grounds.

These assurances are that Assange would be protected by and allowed to rely on the First Amendment – which protects freedom of speech in the US – that he is not “prejudiced at trial” due to his nationality, and that the death penalty is not imposed.

People attend a protest outside the High Court 
Pic: Reuters
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Pic: Reuters

People attend a protest outside the High Court
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Pic: Reuters

Supporters of Mr Assange have already been gathering outside the High Court to continue their calls for his release.

Mr Assange is currently being held in London’s high security Belmarsh prison.

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Hunt for two suspects after man dies in Glasgow stabbing

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Hunt for two suspects after man dies in Glasgow stabbing

Detectives are on the hunt for two men following a fatal stabbing in Glasgow at the weekend.

Police Scotland said the force received a report of a man being attacked and stabbed in Saracen Street, Possil, at around 5pm on Saturday.

Emergency services attended and took the 27-year-old victim to the city’s Queen Elizabeth University Hospital, where he later died.

The death is being treated as “suspicious” ahead of the completion of a post-mortem examination.

Investigating officers have since established that two men were involved in the attack.

The suspects have been described as white and in their 30s.

One was wearing a light-blue top and black shorts, while the other was dressed in a white top, black shorts and black trainers.

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Officers have been gathering and reviewing CCTV footage from in and around the neighbourhood as the probe continues.

Additional patrols have also been mobilised to the area, and anyone with information or concerns can approach these officers.

Read more from Sky News:
The stories behind 100 victims of infected blood scandal
Probe launched after man dies in police custody

Detective Inspector Lesley-Ann McGee said: “It was a warm, sunny day and there were lots of people out enjoying the weather in Saracen.

“I am asking them to get in touch with us with any information that could assist us in establishing the motive for this attack. If you saw, heard or know anything please contact us.

“I’m also asking people with dashcam or doorbell recording equipment to check for any footage that could assist our investigation.

“A family is mourning the loss of a loved one and it’s imperative we are able to answer how their loved one died.”

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