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The Bank of England’s governor has ruled out extending its bond-buying support for pension funds beyond Friday’s deadline, prompting a dramatic fall in the value of the pound.

Andrew Bailey told an event in Washington that funds had “three days left… to get this done” after a series of interventions to support the “dysfunctional” market in the wake of the wider meltdown over the government’s mini-budget.

The latest action, on Tuesday, saw the Bank snap up index-linked gilts, government bonds with interest payments in line with inflation.

They are heavily used by pension funds.

The Bank had already been buying up long-dated gilts – a type of government bond that make up a large proportion of pension pots – to steady market jitters.

They saw yields – the rate demanded to hold government debt – shoot up as pension schemes tried to raise hundreds of billions through firesales of government and corporate bonds to meet cash calls – the latest coming from providers of so-called liability-driven investment strategies.

They are demanding funds put up more money to support new and older hedging positions.

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Mr Bailey told an event organised by the Institute of International Finance that the intervention must be temporary.

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“We have announced that we will be out by the end of this week. We think the rebalancing must be done.

“And my message to the funds involved and all the firms involved managing those funds: You’ve got three days left now. You’ve got to get this done.”

Industry body the Pensions and Lifetime Savings Association had earlier urged the Bank to extend the bond-buying programme until 31 October – the new date for the publication of the government’s debt plan – at least.

Mr Bailey’s clear stance on the issue saw the pound, which had been trading higher on the day versus the dollar earlier, sink by more than one and a half cents to below $1.10.

What on earth is happening in UK markets?


Ed Conway - Economics editor

Ed Conway

Economics & data editor

@EdConwaySky

This is starting to look a little… unnerving.

The government bond market is – in the UK and elsewhere – best thought of as the bedrock of the financial system.

The government borrows lots of money each year at very long durations and these bonds are bought by all sorts of investors to secure a low but (usually) reliable income over a long period of time.

Compared to other sorts of assets – such as the shares issued by companies or for that matter cryptocurrencies – government bonds are boring. Or at least, they’re supposed to be boring.

They don’t move all that much each day and the yield they offer – the interest rate implied by their prices – is typically much lower than most other asset classes.

But recently the UK bond market (we call them gilts as a matter of tradition, short for gilt-edged securities, because in their earliest embodiment they were pieces of paper with golden edges) has been anything but boring.

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On Monday the Bank announced a potential doubling of the amount it was willing to spend every day on long-dated gilts.

Gilt yields, the interest rate payable on government bonds, rose on Monday, near the 5% highs of 27 September, the day before the Bank made its first intervention.

They fell when news of the latest operation was announced but long-dated yields later rose higher again.

That took place when the Bank revealed it had bought £1.947bn of index-linked bonds on Tuesday, adding that it had rejected £466.9m of offers to sell to the central bank.

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It also bought up £1.363bn in long-dated bonds – also well below the £5bn possible.

The yield on 30-year bonds rose back to 4.8% for a short time, having been down at 4.4% around lunchtime.

The benchmark 10-year yield remained around the 4.4% level.

“Things seemed calmer again today,” Mr Bailey told the event.

“We will see,” he added.

The Bank announced on 28 September a temporary and emergency buying programme of long-dated gilts that are to be repaid in 20 to 30 years time, in the wake of chancellor Kwasi Kwarteng’s mini-budget announcement.

Read more:
What are bonds, how are they different to gilts and where do they fit in the mini-budget crisis?

Bond buying period due to end on Friday

Market turmoil that stemmed from the mini-budget led to the unprecedented intervention from the regulator to prevent part of the pension market collapsing as the cost of interest on gilts surged.

Russ Mould, investment director at AJ Bell, said of the scheme’s expansion before Mr Bailey’s remarks: “The Bank of England hopes to avoid a crisis in the market by being a willing buyer of bonds from pension funds who are under pressure.

“These pension funds will welcome today’s move, but whether the broader market shares the same enthusiasm remains to be seen.

“The key sticking point is that the support measures are only scheduled to last until Friday.

“Will that be long enough, or will the Bank of England extend the support scheme? Extending it could go one of two ways – the market either applauds the move and breathes a sigh of relief or it gets even more worried, thinking that the extra time suggests the crisis is more severe than originally thought.”

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Victims of maternity failings ‘disappointed’ with findings of damning report

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Victims of maternity failings 'disappointed' with findings of damning report

Victims of maternity failings say they’re “disappointed” with the findings of an interim report which they fear will have “no teeth” to make changes. 

An investigation into NHS maternity services is under way after a series of shocking scandals.

The National Maternity and Neonatal Investigation (NMNI) is being led by Baroness Amos, who said “nothing prepared her” for the amount of “unacceptable care” families currently receive.

A report has been released documenting her initial reflections and impressions after meeting families and visiting hospitals.

She will investigate 12 NHS trusts in total, including Oxford University Hospitals (OUH), which runs the world-renowned John Radcliffe Hospital.

‘I was left in my own blood’

Rebecca Matthews formed a campaign for families failed by OUH after her own traumatic births.

Asked to discuss the care she received, she said she “could only describe it as callous”.

“There wasn’t any kindness there. I was left in my own blood,” she added.

Ms Matthews recently took part in evidence-gathering sessions held by Baroness Amos.

But when she read her interim report, she said it was “disappointing”, as it appeared to be “a bullet point list of failings that actually we’ve seen time and time again in independent reviews”.

“The reflections don’t mention accountability at all,” she said.

Your stories of birth trauma

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Birth trauma: Your stories

‘Why are we struggling to provide?’

Based on her initial inquiries, Baroness Amos found common themes, including women not being listened to and being “disregarded” when they raised concerns.

Many weren’t given the right information to make informed choices about their care.

She was told of discrimination against women of colour, working-class mothers, or parents who were younger.

A “staggering” 748 recommendations have been made about NHS maternity services in recent years, Baroness Amos revealed – and she does “not understand why change has been so slow”.

She asked: “Why are we in England still struggling to provide safe, reliable maternity and neonatal care everywhere in the country?”

Baroness Valerie Amos. Pic: Reuters
Image:
Baroness Valerie Amos. Pic: Reuters

The most recent health watchdog findings paint a depressing picture of maternity services.

Almost two-thirds of acute hospital maternity services were judged either inadequate or required improvement for safety.

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Three women describe traumatic childbirth

This investigation is long overdue and isn’t due to report back fully until the spring.

But some campaigners are already worried it won’t bring meaningful change to maternity services.

Ms Matthews said it “seems as though it’s heading the same way that other reviews have gone in the past, leading to some recommendations but no teeth”.

“We need some mechanisms that are going to hold people and systems to account,” she said.

‘More to do’

OUH chief nurse Yvonne Christley said in a statement that “feedback received from patients using our maternity service over the last year is positive overall”.

“However, we know we have more to do to improve our maternity services,” she added.

“Our present focus is on listening to the experiences of women and families, which is helping us to identify opportunities for improvement.”

Anyone feeling emotionally distressed or suicidal can call Samaritans for help on 116 123 or email jo@samaritans.org in the UK. In the US, call the Samaritans branch in your area or 1 (800) 273-TALK.

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Royal Navy chief gives stark warning: Fund defence or risk losing Atlantic to Russia

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Royal Navy chief gives stark warning: Fund defence or risk losing Atlantic to Russia

The head of the Royal Navy has warned the government to “step up” and fund defence or risk losing the UK’s superiority in the Atlantic to Russia.

Should that happen, General Sir Gwyn Jenkins said it would be the first time since the end of the Second World War that Britain’s warships and submarines were not the dominant force in their most vital sea lanes alongside their allies.

“We are holding on, but not by much,” he told a conference in London on Monday.

“There is no room for complacency. Our would-be opponents are investing billions. We have to step up, or we will lose that advantage.”

As a senior, serving military officer speaking publicly, he did not make any direct criticism of the speed of plans by Sir Keir Starmer’s government to increase defence spending.

But Sky News has reported that he and his fellow chiefs held a “very difficult meeting” last month over how to fund plans to rebuild the armed forces amid fears of further cuts.

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Budget: what about defence spending?

Defence sources said there was growing concern at the very top of the armed forces about a gap between the promises being made by the prime minister to fix the UK’s hollowed-out defences and the reality of the size of the defence budget, which is currently not seen as growing fast enough.

That means either billions of additional pounds must be found more quickly, or ambitions to modernise and transform the armed forces might need to be curbed, despite warnings of mounting threats from Russia and China, and pressure from Donald Trump on allies to spend more on their own defences.

A Sky News and Tortoise podcast series called The Wargame tracks the hollowing out of the UK’s military since the end of the Cold War and the risk that has created.

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General Jenkins, the first Royal Marine to serve as First Sea Lord, used a speech at the Sea Power Conference to say that Russia is still investing billions in its naval capabilities – in particular the Northern Fleet that operates in the Atlantic – even as it wages war against Ukraine.

There has been a 30% increase in Russian incursions in the North Atlantic in the past two years, he said.

That included the Yantar spy ship, which last month was spotted off the coast of Scotland and even shone a laser at the pilots of a Royal Air Force reconnaissance plane that was tracking the vessel.

The Russian spy ship Yantar. Pic: MOD/PA
Image:
The Russian spy ship Yantar. Pic: MOD/PA

Yet General Jenkins said what Russia is doing beneath the surface of the waves, where the UK and its allies store vital communications cables as well as critical oil and gas pipelines, was even more concerning.

“I can also tell you today that the advantage that we have enjoyed in the Atlantic since the end of the Second World War is at risk,” he said.

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HMS Iron Duke shadowing the Russian Frigate Neustrashimy through UK waters in September. Pic: PA
Image:
HMS Iron Duke shadowing the Russian Frigate Neustrashimy through UK waters in September. Pic: PA

Navy facing huge challenges

It is a particularly tough time for the navy, which has more ships and submarines alongside and unable to operate than at sea or at least ready to sail.

The service is also suffering from a shortage of sailors and in particular submariners, which again is impacting the availability of the fleet.

The crisis follows decades of funding cuts since the end of the Cold War, compounded by a litany of botched procurement programmes that has all too often seen vessels coming into service years late, at an inflated price and in too few numbers.

Vision of ‘hybrid navy’

Despite the sombre tone, the First Sea Lord set out how he wants to transform his service and make it ready to fight a war – though not until 2029, a timeline that could be too slow if some predictions about the threat posed by Russia to NATO are correct.

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New UK military technology unveiled

His vision – working with industry and other allies – is about developing a blend of manned ships and submarines as well as unmanned ones – a “hybrid navy”.

He is also stripping back what he called the navy’s own bureaucracies to enable the service to move much faster – crucially at the pace of the threat and the pace of rapid and growing technological change.

“We will face headwinds, we will face rough seas, but together, we can solve these problems if we have the appetite, if we have the determination, and if we have the mindset.”

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Teen Afghan asylum seekers locked up for raping girl

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Teen Afghan asylum seekers locked up for raping girl

Two teenage asylum seekers from Afghanistan face possible deportation after being detained for abducting and raping a 15-year-old girl.

Jan Jahanzeb and Israr Niazal, both 17, led the “highly-distressed” victim away from friends near Leamington town centre to a secluded “den-type” area in parkland, where they pushed her to the ground and attacked her.

Sentencing the pair at Warwick Crown Court on Monday, Judge Sylvia de Bertodano said they ignored the victim’s “vigorous protests” and told them what they did “changed her life forever”.

“No child should have to suffer the ordeal that she suffered. It’s clear from the footage we have seen that no one can seriously entertain the thought that you believed she was consenting,” she said.

“You both knew perfectly well that what you were doing was criminal and wrong,” the judge added.

‘Highly distressing’

After lifting reporting restrictions protecting the identities of the defendants, the judge told them they had “betrayed” those who come to Britain seeking sanctuary and who observed the law.

Both defendants were unaccompanied child asylum seekers who arrived in the UK last year, prosecutor Shawn Williams said.

The incident happened in May of this year.

“Highly distressing” phone video found by police showed the victim screamed for help, but Jahanzeb placed his hand over her mouth.

CCTV footage showed that after being led away against her will, the terrified victim was “moved to a bushy den-type area – a really secluded location” before, according to her, she was “pushed to her knees before being raped”.

“The prosecution case is that it was probably Jahanzeb that did that, but what is certain is that Israr Niazal was present and participating,” Mr Williams said.

The victim had made “explicit verbal protests” during what Mr Williams described as an abduction.

What are their sentences?

Jahanzeb, who has already been served with deportation notification papers, was given 10 years, eight months’ youth detention.

Niazal, who may also be deported, was sentenced to nine years and 10 months.

They will start their sentences in a young offenders’ institution and move to prison at a later date, police said.

Both pleaded guilty to rape at an earlier hearing.

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Detective Chief Inspector Richard Hobbs said the offenders “went out of their way to befriend the victim with the intention of raping her”.

“The length of their sentence reflects the severity of their crime and the need to protect the public from them,” he added.

After sentence was passed, Judge de Bertodano said the victim had been “beyond brave” in attending court at a previous stage, when the defendants had intended to plead not guilty.

They were both ordered to register as sex offenders.

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