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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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Man, 76, arrested on suspicion of administering poison at summer camp after eight children taken to hospital

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Man, 76, arrested on suspicion of administering poison at summer camp after eight children taken to hospital

A 76-year-old man has been arrested on suspicion of administering poison at a summer camp which led to eight children being taken to hospital, police said.

Police received reports of children feeling unwell at a summer camp in Canal Lane, Stathern, Leicestershire, on Monday.

Paramedics assessed eight children, who were taken to hospital as a precaution and have all now been discharged.

The suspect was arrested at the camp and remains in custody on suspicion of administering poison with intent to injure/aggrieve/annoy.

Detective Inspector Neil Holden said: “We understand the concern this incident will have caused to parents, guardians and the surrounding community.

“We are in contact with the parents and guardians of all children concerned.

“Please be reassured that we have several dedicated resources deployed and are working with partner agencies including children’s services to ensure full safeguarding is provided to the children involved.

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“We also remain at the scene to carry out enquiries into the circumstances of what has happened and to continue to provide advice and support in the area.

“This is a complex and sensitive investigation and we will continue to provide updates to both parents and guardians and the public as and when we can.”

The force said it has referred itself to the Independent Office for Police Conduct (IOPC) over what it said was the “circumstances of the initial police response”.

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‘No evidence’ malign activity caused Wednesday’s air traffic disruption, says transport secretary

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'No evidence' malign activity caused Wednesday's air traffic disruption, says transport secretary

There is no evidence that malign activity was responsible for yesterday’s outage of air traffic control systems, the transport secretary has said.

Heidi Alexander said she has spoken with the chief executive of National Air Traffic Service (NATS), Martin Rolfe, and added that what happened was an isolated incident.

NATS has apologised for the IT problems after thousands of passengers suffered extensive travel disruption during one of the busiest times of the year.

The technical glitch led to more than 150 flight cancellations, leaving airlines reacting furiously.

alexander
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Transport Secretary Heidi Alexander

Ms Alexander wrote on X: “I have spoken with NATS CEO Martin Rolfe who provided further detail on yesterday’s technical fault.

“This was an isolated event and there is no evidence of malign activity.

“I know that any disruption is frustrating for passengers.

“Flights are now resumed and I am grateful to airlines who are working hard to get people to where they need to be.

“I will continue to receive regular updates. Passengers should check with airlines before travelling.”

Read more: Flight delayed or cancelled? These are your rights

Officials said a “radar-related issue” caused the air traffic control failure.

A spokesperson for NATS said: “This was a radar-related issue which was resolved by quickly switching to the back-up system during which time we reduced traffic to ensure safety.

“There is no evidence that this was cyber related.”

The problem occurred at NATS’ control centre in Swanwick, Hampshire, and affected the vast majority of England and Wales.

Aviation analytics company Cirium said 84 departures and 71 arrivals were cancelled to or from UK airports up to 10pm on Wednesday, with several flights diverted to other European airports.

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Travel expert Paul Charles: This is a major outage

There was limited disruption on Thursday, with a handful of British Airways flights cancelled because aircraft and crew were out of position.

Heathrow and Gatwick airports said they had resumed normal operations.

Affected passengers are unlikely to be entitled to compensation as the disruption was outside of airlines’ control, but they will be able to claim expenses for a reasonable amount of food and drink, a means to communicate and overnight accommodation if required.

Martin Rolfe in 2023. Pic: PA
Image:
Martin Rolfe in 2023. Pic: PA

Ryanair has called on Mr Rolfe to resign, claiming “no lessons have been learnt” since a similar systems outage in August 2023.

The airline’s chief operating officer Neal McMahon said: “It is outrageous that passengers are once again being hit with delays and disruption due to Martin Rolfe’s continued mismanagement of Nats.”

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‘No lessons have been learned’: Airlines furious after another technical glitch cancels flights

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'No lessons have been learned': Airlines furious after another technical glitch cancels flights

Airlines have reacted furiously after a technical glitch in air traffic control systems led to more than 150 flight cancellations.

The National Air Traffic Service (NATS) has apologised for the IT problems – and said systems were back up and running 20 minutes after the “radar-related issue” was detected at 4.05pm.

But with thousands of passengers suffering extensive travel disruption, during one of the busiest times of the year, airline executives have warned this isn’t good enough.

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Departures resume after ATC problem

Ryanair’s chief operating officer Neal McMahon has called for NATS chief executive Martin Rolfe to resign – and claimed Wednesday’s incident was “utterly unacceptable”.

He said: “It is outrageous that passengers are once again being hit with delays and disruption due to Martin Rolfe’s continued mismanagement of NATS.

“It is clear that no lessons have been learnt since the August 2023 NATS system outage, and passengers continue to suffer as a result of Martin Rolfe’s incompetence.”

Mr McMahon was referring to a glitch that affected more than 700,000 passengers two years ago – and said that, if Mr Rolfe refuses to step down, the government should intervene.

“Heidi Alexander must act without delay to remove Martin Rolfe and deliver urgent reform of NATS’ shambolic ATC service, so that airlines and passengers are no longer forced to endure these preventable delays caused by persistent NATS failures,” he added.

The Department for Transport says Ms Alexander does not have any direct control over NATS – and no powers over staffing decisions at the service.

Martin Rolfe in 2023. Pic: PA
Image:
Martin Rolfe in 2023. Pic: PA

EasyJet’s chief operating officer David Morgan added: “It’s extremely disappointing to see an ATC failure once again causing disruption to our customers at this busy and important time of year for travel.

“While our priority today is supporting our customers, we will want to understand from NATS what steps they are taking to ensure issues don’t continue.”

NATS is yet to comment on the calls for Mr Rolfe’s resignation – but has stressed that the glitch is not believed to be “cyber related”.

“This was a radar-related issue which was resolved by quickly switching to the back-up system during which time we reduced traffic to ensure safety,” a spokesperson had said.

Departures at airports across the country have now resumed – but passengers are being urged to check with their airline before heading to terminals.

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Travel expert: This is a major outage

John Carr, from Stourbridge, was on his way from Heathrow to Norway to help arrange his brother’s wedding when he discovered his flight was cancelled after checking in.

“I’m pretty gutted,” he said. “We’ve got loads of stuff in the suitcases to set up the venue, because we’re obviously flying to Norway. We’ve got the wedding rehearsal to do. It’s quite stressful.”

Liberal Democrat leader Sir Ed Davey called for an urgent investigation and also referred to the “utterly unacceptable” disruption two years earlier.

“With thousands of families preparing to go on a well-earned break, this just isn’t good enough. The public deserve to have full confidence in such a vital piece of national infrastructure.”

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Flights departing or arriving at a UK airport, or aircraft operated by a UK airline arriving in the EU, are subject to rules concerning delays or cancellations.

Airlines may have to provide compensation, although there are exemptions for “extraordinary circumstances”, according to the UK’s Civil Aviation Authority.

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